This is not a common use of the word by any means. But he seems to be saying that the crime scene is fake, because after "busted" he also describes it as "staged."

I agree with the others. It's not a common usage, but he means it's messed up, there's something wrong with it, etc.

This might be police jargon. Native English speaker here, and I don't know what he means exactly. One idiomatic meaning of "busted" is "ugly" (often used to describe people, which is extremely rude of course). It could also mean "ruined" or "broken". In this case, if you are confused you are in good company. I wouldn't worry much about it.