The coil that came out with the bolt, what was it made of? Looks like aluminum from the pic, helicoil inserts are made of high-carbon steel and wouldn't, I think, deform like that.
If the material was aluminum, that's what happens when you over-tighten the bolt, it shears off the aluminum threads and you end up with an aluminum coil and a hole with smooth walls. It it was a helicoil that backed itself off, then you'd still have threads in the hole.
Tim, when running the tap from the kit into the hole, make sure proceed by going in a few turns, then backing the tap out to clear out the shavings. If you try to just run it all the way in, the shavings could jam up the tap and cause it to break. Also, use some oil on the tap. There's actual thread cutting oil on the market but any reasonably thick oil should do. Motor oil should be fine. Degrease the hole before inserting the helicoil.
mystic_1