Where to cut the stem? and any suggestions for better care.

[kjp8128]

My Phal dropped its flowers, but a stem is peeking out see stem photo of a nub. I have posted a picture the nub is where the clip is. I already cut off the brown part of the stem but should I cut further down?
See roots photo-Also, last time I watered I noticed some of the roots deflated and turned brown. I do not prefer the medium that this plant is in. Is it possible to repot this plant or should I leave it alone?
If you look at the photo named pot of orchid you will notice that these roots look good. You will also notice that I had to cut two leaves off because they were yellow and about to fall off. I put some cinnamon on the orchid so it would not get infected. This picture is just to show that part of the plant. After seeing this pic should I do something to better care for this plant?

Thank you very much,
Katie

P.S. first time photo upload let me know if you cant open them.