It would be helpful, perhaps, if you were to post the model of your mower.
I am not familiar with a mower having a "hold" button or what it may be for. As a for instance, on mine you actually cannot get off with the blades engaged and without the parking brake on without it killing the motor. (not that it has anything to do with your issue, just saying)
On the typical riding mower you have two belt systems that run off the motor. One of the is the drive system, and the other is your blade system. With no small amount of certainty with the issue you describe it was one or the other of those belts screeching and smoking. The key will be to find out which. It should also be noted that in the case of some multi bladed deck systems there will be a third belt running the blades down at the deck level.
In the case of the drive system there will be a "clutching" mechanism of sorts that either engages with the drive pedal or speed control. Without knowing what the "hold" button you mentioned is for or how it operates, could possibly have something to do with issue.
The blade system is usually controlled by a lever or button that causes a pulley wheel to tighten the belt onto the drive shaft and thus spin the blades. In my experience with a similar issue, I would almost bet your issue resides here. Most often what I have seen is for that pulley wheel bearing or the wheel itself to go bad and bind the belt. Often this can be further troubleshot by disengaging the blade mechanism. Should crank, run, and have no issues while blades are "off". As noted above, if you have a separate deck belt you should check it for obstructions as well. Just the same, with the blades disengaged it would not interfere with cranking. (in some cases a deck bearing can go bad or be damaged, binding a blade, this belt, and the drive belt)
In the instance that the blades are off/disengaged and this issue persists, it has to be within the drive system.
If you look in your manual and sometimes even on your deck there will be instructions for replacing those belts. IF you are inclined, remove both belts and see if it will then crank. Replace the drive belt first, see if you have go, then the blade belt.