First time.

Planted peaches and cream hybrid.

Is the ground tainted?

I've never seen corn smut, but googled it and from what I read, the answer to your question is ... yes the ground is tainted. Doesn't sound good.

Some suggestions I found:

1. Choose the best resistant varieties, such as silver king, fantasia, brilliant and seneca sensation, when available.
2. In backyard gardens, collecting and destroying galls before the dark fungal spores are released is suggested. This will limit the number of available fungal spores and help break the disease-cycle.
3. Reduce infection points by avoiding injury of roots, stalks and leaves during cultivation.
4. Prevent damage from insects, such as corn borers, with Monterey® Garden Insect Spray or other organic insecticide.
5. Fungicides are NOT an effective control option since the disease is so widespread and can persist in the soil for years.
6. High nitrogen fertilizers may increase the severity of the disease — use a balanced organic fertilizer in the vegetable garden.
7. Remove and destroy all garden debris after harvest and practice crop rotation the following year.
8. Bag or burn infected plant parts — do NOT compost.

Note: Corn smut can pass through the digestive tracts of animals and is often spread while using manures.

A new disease was discovered late last year and is doing damage to corn in several states, including eastern Colo., that is called bacterial leaf streak. Sounds like it's being found in many states now. Our local news station did a story on it just last week.
If it ain't one thing, it's another.

Apparently there are some varieties which are more resistant to it.

I worked in Mexico for most of last year. That corn smut is smeared in a burrito and served as a high dollar appetizer. They were appalled when I told them we just would throw the whole ear away as opposed to even trying to cut it off.

Thought you caught a raccoon.