Ahhh...okay...I didn't see the bark under the layer of sphag. Your method makes total sense...I just couldn't see the under-layer in the pic.

It sounds like it was already in trouble before you repotted it. And didn't you say once before that you repot things right away when you get them? So that means that this isn't your doing at all...the orchid was likely on its way to bulb rot when it was still in shipment to you. Did you by any chance get both of these troubled plants from the same vendor?

Anyway, don't write this orchid off as a lost cause just yet. I wouldn't say this is money "down the drain." You can remove the yucky stuff and salvage the rest. Once you sanitize it, I'm sure the healthy stuff will be okay. It's always a guessing game at first when you're trying to figure out what a new orchid likes. Don't lose hope!