I would certainly leave the small spike, as it looks vigorous. While the plant certainly looks to have had some neglect, it also looks like it has enough roots to support it. I guess I'm trying to say it looks like a survivor!
I know the conventional wisdom would be don't repot a spiking plant, however, I know several growers in my OS who routinely repot phals in spike or bloom, immediately following purchase, and say they have never had a problem. I've even done it myself on rare occasions.
Moss isn't necessarily bad, as I'm sure you are aware, but I suspect this moss is too tightly packed--my biggest complaint with the vast majority of plants I see for sale--and the plant would at least benefit from repotting into fresh media. If you like bark, then I'd do bark, but I guess I'd suggest my real underlying suggestion is using whatever media you have the most success with.
I might cut off the old spike, in part for the sake of the plant, and in part because it probably won't give you a very attractive display of blooms.