Hey,
After my bad luck with installing the toyota alarm system, I noticed another problem while disconnecting the battery from the negative post. The cable coming from the battery cable to attach to the body has frayed/broken. The plastic insulation around the cables has cracked, and the copper wires have "broke". It almost looks like someone tried to cut the cable....There are just several strands of copper wire still attached making the "connection" to the car.
So, I went to the autostore and all they offered was a complete battery cable replacement. Does anyone have any ideas how to fix this? or..should I take it in?
Picture:

What was the "complete battery cable replacement" they offered?

The cable replacement includes:
The new grounding point that connects to the body of the car then connects to the battery. Then the cable connects from the battery (-) to some where else in the car where it is supposed to. (You can tell I have no clue what to do right now haha)

(car body) -------cable black----> [battery negative point]----cable black--->(some point in the car)

You definitely should repair this break in the wire. The best way to do that is buy the replacement (either from the auto parts store or the dealer; I would price them both.) Do it yourself and save some of your money, you don't need to pay the stealer the installation labor.

It's not as intimidating as you think. You already have 2 connections you can see and handle. The end you can't see goes to the starter. Here is the sequence I would do after buying the new cable:
Disconnect the current cable at the neg (-) just like you did above.
Disconnect it at the fender.
Trace the cable down to the starter and disconnect.
Connect the new cable at the starter.
Connect at the fender.
Connect to the battery last.

Pride in working on the T4R: priceless!

Another way to fix would be to splice a new length from the fender to the battery. Look at the connections. See if you feel comfortable and have the tools to pry these open, insert a new short length (from an auto store) and close these crimps...

Thought so. Go back and look at the first plan again.

Good post, kmvreter. Only thing I'd add is that I would also remove the cable from the positive battery post, just to be sure I wouldn't create a problem (I can be a bit clumsy).

Thanks guys! I looked into the engine bay more and noticed a problem. That negative cable that leads away from the battery to the bottom of the engine bay goes into a wire wrap with other black cables. What I mean, that the cable is then wrapped into some other wires with some hard plastic shell covering the bundle. Should I cut the wires apart or what should I do?

Got to a boat supply place or even a decent auto parts place and you can buy the end ring connector (for a battery cable) and either crimp it on or solder it on (or bet yet both). Parts are couple bucks if that. I'd shorten the cable a little to get to good wires - there should be enough slack. Like other poster said be sure to disconnect + side - or you have frizzy hair or singed fingers.