I have bought many Cattleyas that have a root system just like that. They always recover. Thankfully, you have a new growth starting and even a root (Mine are usually not as fortunate).
Here is what I do: I get a basket pot and either red lava rock or LECA and fill it nearly to the top. I remove all the dead roots and then I stake it on top of the medium (I wouldn't bury the new root, either but let it bury itself) so that it doesn't wiggle. Put the pot where it doesn't need to be moved for a few months. The new roots will grow down into the medium and anchor the orchid. By putting it into LECA/red lava rock and a basket pot, you are allowing more air around the roots which will help prevent rot. By not burying the living root, you do not risk harming it.
Good luck!
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