Lighting fixtures~bad smell

i installed a 3 way switch and when i flip the switch1 to off im not able to turn on switch2 until switch1 is turned on ........ when i turn on switch2 and off im not able to turn on switch1 ...... vice versa whats wrong

I am sometimes the demo man on older residential and smaller commercial remodel jobs and I need some help in regards to earth ground safety. As I understand it many of these older buildings used the water pipes as a means of grounding their system instead of the grounding rods. Much of my work entails adding on to the foundation, and ripping out the old incoming water/sewer lines and thats it until the other trades come in. My plumber people have warned me about pipes being hot, can I check the pipes with a voltage sensor prior to working on them? If their is a fault somewhere in the wiring system and I lop off the incoming water pipes will this put users at risk? Would power have to be shut off at the box or does the utility have to shut it off at the pole? I need someway to check this since sometimes we don't get an electrician on the job until later, and I don't want to put myself or anybody else in danger.