Arduino died when grounds got disconnected
When ground potential is disconnected and isolation is imperfect, a new reference will be established based on whatever residual coupling or parasitic paths still exist.

In mixed supply situations you can see very large currents and over voltage conditions as a new circuit is established between supplies and load (e.g. -5V behaving as system ground), which redistributes the potentials in the system, sometimes quite drastically. 

If you observe on many common connectors, the ground pins are longer than other pins to ensure they are connected first and disconnected last for this very reason. Isolated switching supplies (like a wallwart or switch cap inverter )  in particular can have a tendency to "launch up" to very high voltage when ground reference between nodes  is disconnected. 

The most likely culprit is that your (floating) 110V AC is the heavy hammer that finds a path to ground through some other device or supply, and smashes your components. It is likely your divider is removed from circuit when ground potential is cut and so your circuit sees the full AC waveform somewhere as the divider is out of circuit.