GFCI Circuit Breakers Wired Incorrectly
When you pulled the Neutral wire off of the N bus, did you turn the breaker off first? I suspect that you did not, which would explain the arcing.
You are correct about the error in wiring of the existing GFCI breakers; the pigtail (squiggly) white wire goes to the N bus of the panel, the load neutral wire goes to the N terminal of the GFCI breaker. They essentially bypassed the GFCI sensing of any L-N faults. This is indicative of the work having most likely been done without a permit and inspections. If you just moved in, you should take a look at your disclosure forms and if the previous owner stated that all work was done with permits and inspections, they either lied or you have terrible inspectors... If they lied, you should be able to go after them for the cost of having a licensed electrician come out and inspect the entire system for any other errors and make any corrections.
If your outlet is already a GFCI, you do NOT need to have the breaker be a GFCI too. One or the other, not both. It's good that you discovered this problem, but you didn't need to do this project in the first place.