What temperature should a LiPo battery reach during charging?
In normal batteries, the charge energy goes into chemical change, and therefore is not dissipated as Joule heat. As result, normal battery should hold its temperature slightly above the ambient since there is still one source of parasitic heat dissipation - the internal series resistance of the battery. 

If the battery is new and allows 8 A discharge current per specs, I would estimate its ESR as 0.5 V/ 8 A ~ 60 - 70 mOhms. At the 0.5 A charge rate this would lead to losses (dissipation) less than 20 mW, which should lead to a tiny warmth of the cell's body, and will be barely noticeable given the mechanical size of 18650 cell. 

This cell, in accord with specifications, has about 10 W-hr capacity. According to submitted chart, you already have dumped about 9 W-hours of electricity into it. A normal 4.2-V cell should have reached the End-of-Charge Voltage (4.2V) by that time. But it didn't. It means that your charging arrangement must have some other losses, likely a poor (oxidized) connectors of your battery holder, as mkeith suggested.

The cell standard charge is 0.2C (or 520 mA) per specs, it is the absolutely safe charging level.