That phal is trying to send out aerial roots to get away from the wet conditions it had been in. Now that it has been repotted, they will bend towards the "best" conditions they can find, hopefully into your potting medium. Considering how few roots this plant has, and the relatively good condition of the leaves, I would guess that in addition to wet roots, it has been in a very high humidity environment.

I would try to keep it at high humidity until it develops roots at least a couple of inches long. At that point I would try to wean it off the high humidity until it is growing in your normal ambient humidity.

I believe in an owners right to choose and would make the tough choice to save the mother plant and sacrifice the keiki. It is a looong way from maturity, and without a healthy mother its chances are slim.

Either way, it should be a great learning experience. Whatever you do, I would be consistent. It will take months and if you try something different every few weeks the odds of the orchid adapting and growing drop. Pick a path and learn.

Good advice Bob! I agree

It doesn't look sick to me maybe just needs fresh potting mix or sphagnum moss

should I cut the spike? and what are the leaves doing on the spike, is that normal?

The leaves are the beginning of a "baby" or keiki. In several months (on a healthy plant) it would develop more leaves and finally roots. Eventually you would be able to cut the spike and have a second, identical plant.

Unfortunately, the parent plant is probably not going to be able to provide enough nourishment (because of the badly damaged root system). If the parent plant dies before the keiki is well developed, they both are gone. I would sacrifice the less viable plant (the keiki) to save the most viable plant (the parent). Even with this, you have a long road to recovery. You have to decide if you want the learning lesson of trying to save it, or if you just want the enjoyment of healthy plants. I personally like the challenge of bringing something back from near death, but I have the luxury of a large enough collection that something is always in bloom to bring joy. If I had only a few plants, I don't know if I could play doctor. There is a chance that this plant will not survive regardless of what you do. You can save yourself grief, but learn little, or you can have a "learning experience" with maybe some grief and maybe some joy.

The problem in giving advice is that there are no absolutes. What works under the way I grow orchids may not work the same way under your conditions. If we all grew in chambers where the media, the humidity, the light cycles, etc were all controlled and matched, exact advice could probably be given. Our worlds aren't nearly that perfect, and on top of it, we're all human and subject to our own beliefs, opinions, and prejudices.

All you can do is read the opinions, make a choice, and STICK WITH IT. If you change your conditions every week, you'll never find what works for YOU (and that's what is most important).

The short version - cut the spike - sorry to go all philosophical on you.

I agree that the leaves on the mother look healthy, but there aren't enough roots to support all of the keiki's. I also agree with the last philosophical statement. It's all a matter of what you want to do, and then what path you choose.

Best of luck to you and your orchid! Keep us posted.