well i am new at this but what i have learned in the past weeks from some of the guys in this forum is that you should scrap a bark with your nail and see if its green.if you find green then its still alive.

dsptech, Your protection system sounds very good except for two things: the inner tarp with holes in it and unwrapping about two weeks ago.
The inner tarp probably trapped too much moisture - even with the holes. When the temperatures start to climb in the spring this moisture leads to fungus problems which can attack the branches.
Fig trees are pretty hardy. The trick is to protect them through the worst of the winter cold and then unwrap them when the temperature will stay above 20 degrees or so. They should still be dormant and able to take freezing temperatures. Without a crystal ball or psychic abilities, timing the unveiling is a tough call.
The good news is the tree is probably not dead (even if the top is a goner), it will almost certainly sprout from the base. Depending on the fig it may, or may not produce figs for you this year if the dieback is all the way to the bottom. Some varieties will produce the season after dieback, others won't.
Good luck.

That sounds about right.
When I unwrapped the inner tarp (actually a cheap fabric drop cloth) it was drenched. There were black mold spots all over it. It looked like old bread that started to get moldy.
The branches had a grey colored mold sticking to it. I had assumed that the fabric drop cloth would breath but I obviously was wrong.

The branches are dry and easily snapped. Some do have some green just under the bark. The inner core is white.
My concern is that the trunk of the tree (which is only about a foot and a half high)has clacks in it and sap is leaking out of the cracks.
Should I wrap the trunk to help it seal the cracks shut or is the tree trying to heal itself and will sprout from the cracks?

I will get some pics in the next few days.
Thanks for replying.
I feel a little better about it now.

dsptech, I'm not clear as to what kind of damage you have - or what caused it. Is your bark sloughing off the trunk - is it "mushy" and loose around the cracks? Are there just a few cracks - many? Is there wood that looks undamaged?
I've had some fungus damage to covered trees. It generally starts in the softer wood - the branch tips and works down. I've never had it go all the way to the base of a tree (which isn't to say it couldn't). It sounds as if your trunk is damaged rather than infected.
Are you saying that both those inner covers were fabric? (I thought the tarp with holes you mentioned was plastic and trapping moisture.) If that's the case, it doesn't make sense to have them so wet and with so much fungus, unless some water was getting into the structure or something was damp when you closed it up. Is it very likely that the snow melt you mentioned got in there and pooled around the trunk?
What are you planning to use if you wrap the trunk?
Sorry for so many questions and very little help. A picture might help.