Don't cut the flower spike. Psychopsis (note spelling... I did get a bit of a laugh, will correct the title of the thread

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are generally not happy about repotting, but if the medium was bad enough to rot roots, you do had to do it. (Wrinkled leaves just indicate that it's not able to take up water... lack of roots) I would repot into high-quality bark (such as Orchiata), or an inorganic medium, using a stake (or two) to keep the plant stable until it grows some roots.(So you don't have to repot again for as long as possible) The new growth is a good sign - with new growth you will also get new roots. A good soak with Kelpmax, if you can get it, may also help.