Unfortunately, it doesn't sound good for your battery. I have never tried checking voltage of my LiPos using a multimeter, I use a watt's up meter (watt meter), but I have used them for my NiMH Rx battery with excellent results.
I'm not sure what could have happened as it sounds like what you did was fundamentally correct. Not knowing what type of meter you have makes it hard to diagnose your problem.
Here's a tutorial on multimeter usage if you are interested.
Yours seems to be set exactly as I use mine. In my pic, I am not showing the leads, but they go in the black and red holes on the RIGHT. The only thing I can think is that you crossed the leads. That is, touched them. If your put the probes on the opposite sockets on the balance plug itself, I think it just reverses your reading (makes a positive number negative).
I use the pointed probes, which have a lot of bare metal in close proximity. And I can't get a reading in the balance plug itself. So I porbe the face of the plug where the wires anchor. It is extremely easy to jump slots or accidentally touch the probes.
Incidentally, I haven't killed a battery yet by shorting it. I've allowed the battery charge leads to touch while soldering (scary ). But the battery didn't puff and still operated fine after I got the plug soldered on. Keep an eye on yours and then try to get a reading again. It may not be damaged. Do it in the clay pot though maybe.
EDIT: I have mine set as Smokejohnson has his. I thought that was your pic.
BIG, your settings were right. The only thing that makes sense is that the leads shorted the battery out by touching when you checked it, as suggested above.
I've had a few sparks from very momentary shorts that had no effect on the life or performance of the battery- but sometimes the bear just eats ya!
Alienx made a good point- if the voltage shown is negative, its simply because the leads are reversed. In the Voltage mode, it is a huge resistor that doesn't allow current to flow.
Having had the long probe leads short out while servicing a 440V commercial condensing unit once, I can assure you it is very easy to do- and can be quite spectacular! I put a length of shrink wrap on the probe leads since only the tips are needed for contact- all the rest of their length is nothing but sheer RISK!
Probably best to get a WattMeter and never have any more questions about any of the electrical parameters of the battery or the power system!
Well, I'll resuscitate this thread, since it helped me a bunch... But, I'm confused-- my 2s lipos are testing @ 7.4 V (3.7 per cell), but still taking charge... How is the best way to test how much charge they have left using a multimeter -- if it can be done...