I agree with Tom. The most probable reason for the burns is that the wheel is DULL. You need a good, sharp diamond and a coarse dressing speed to "open up" the abrasive grain structure on the wheel. I sincerely doubt that the wheel is loading up with steel at such low depth of cut and stepover unless it's far too smooth.
A couple of questions after looking at the pattern a little more:
Is your grinder a hydraulic reciprocation or manual? If a manual feed, it is a gear driven table or cable drive? I notice that the burn marks are very uniform across the short dimension of the chuck. This could indicate that the table is bouncing around if a gear driven one, as I think it would be hard to get that effect if you simply had a severely out-of-balance wheel.
A couple of questions after looking at the pattern a little more:
Is your grinder a hydraulic reciprocation or manual? If a manual feed, it is a gear driven table or cable drive? I notice that the burn marks are very uniform across the short dimension of the chuck. This could indicate that the table is bouncing around if a gear driven one, as I think it would be hard to get that effect if you simply had a severely out-of-balance wheel.