It sounds bad, but those two roots are cause for hope. Get rid of the old medium, especially if it contains soil. Now what you have to do is promote new root growth. I think (I never did this myself) that there is a method where you put the orchid in a closed bag with a little bit of water (very little). The water should mostly evaporate and create a humid environment for the roots to grow in. If you can put some sphagnum in the bag but not on the orchid that would be great too.
You could also do the same by placing your orchid in a fish bowl with very very little water in it. The humid environment around the base of the plant should promote root growth. Any clear bottle should do the same trick too, doesn't have to be a bowl. So long as the leaves are not inside the bowl or bottle.
Essentially what you want to accomplish is a favourable root promoting environment, which means good humidity, no sogginess at all, and no drying out of the roots either, at least not completely.
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"We must not look at goblin men,
We must not buy their fruits:
Who knows upon what soil they fed
Their hungry thirsty roots?"
Goblin Market
by Christina Georgina Rossetti
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