Alright, so let me make sure that I understand your timeline here:
1) Your phal was originally potted in mostly sphagnum moss and you were having some gnat issues.
2) Mold was appearing around July in the area that the old leaf fell off and by the new roots that were popping out
3) roots stopped growing and you had repotted into a mostly bark mix to help it dry out
If this is incorrect, please let me know so we can better help you.
First of all- phals in all or mostly sphagnum potting mixes normally have some problems in the average home for indoor culture because in many cases, it won't dry out enough in the middle of the rootball before they get watered again (because their owners will look at the top that is all dry and think they need to water again). This being said, that continual wetness with little to no air movement is a huge promoter of root rot.
I think that you did a good thing with removing it from the old potting media and treating it with the Physan. I personally cannot advise on the amount of Physan you used, because I have never used it myself. However, in theory that should have taken care of most of the fungal rot.
With the drooping- that can be an indicator that you phal is still thirsty. And there also can be the issue that once they get too droopy, they normally don't fully recover to their original firmness. The thirst factor can come from a couple of different things:
- Not enough roots to sustain the amount of foliage that you have on the top of the plant (from the original rotting problem)
- the roots are having a hard time absorbing and maintaining moisture levels because they are not used to the bark mixture that is much drier. *When roots of orchids grow, they adapt to their environment, whether it be on the drier side (phal air roots) or more on the moist side (sitting in sphagnum or S/H). But once the roots are formed they are extremely limited in the amount of change in the cultural conditions they can handle without having consequences. In your case, your current roots may be rebelling against the sudden change to such a dry environment (even though it doesn't know it is for its own good).
The best way to control thirst and make sure that your roots are not too wet for too long is to use a clear plastic pot for your phal. That way you can see the majority of the roots and their status. When the roots are bright green- they are full of water and don't need any for a while (usually a couple of days in the average home), but when they turn a light silvery color- that is time to water and give a thorough drenching, but still allow the pot to drain out some (some growers suggest 15 min or so).
As for coloration on the roots, sometimes that is just from the change from moist environment into the bark. Some members on OB have remarked that a fair number of their phals will have this happen when using mostly bark as their potting medium. I personally have this happen with a fair number of my roots on my phals and it does not seem to have much of an effect on the overall health of the plant. Older roots will get more of a yellow color and can dry out until they are woody in appearance, but that is part of the natural cycle of senescence- as the plant decides that root or leaf has used up its vitality and is no longer functioning optimally, the plant will often suck the nutrients that structure has back into the main body to use for making a replacement.
After all of this I would say that your plant has been stressed out and not to worry too much about those little nubs of roots- orchids are masters of efficiency; if they cannot sustain a particular growth at that time, they will put it on the back-burner or just say "Stop! That's all I can handle right now." If you are looking to induce roots, I suggest that you either purchase rooting hormone (such as Superthrive) or use a seaweed extract (Maxicrop, Kelpmax, etc) to use as a root stimulant. The seaweed extract has rooting hormones to induce roots but also has other general growth hormones that help orchids and just about all plants flourish! Of course, giving it regular feeding with fertilizer helps as well!
Sorry for the novel, but please don't hesitate if you have any further questions!