That fluting machine seems to be an EDM since as you mentioned the little rod in the barrel chamber appears to be an electrode rather than a broaching device.
That electrode likely is mounted via insulation to the machine and a hot wire connects there to the elctrode. The ground wire would connect to the barrel.
As an engineering student I designed and built a small EDM machine a few decades ago. The EDM had an idiot simple "feedback circuit" that let the operator know when the electrode got welded accidentally to the work. That does happen even with the big buck machines. My heavy duty resistors were 200 watt lightbulbs. When the electrode welded and "grounded out" the bulbs (2 of them) would light up !! That signals it's time to back up and break contact. Fun stuff !!!