Help with root rotted mini Phal with black spots on leaves

[KTAnn]

Hi all, I'm fairly new to Orchids and did a lot of reading before I went and picked out a mini Phal. When I got that one the lady at Agway told me she had another that wasn't doing as well and I could have it for free if I wanted. So because I'm a plant softy I took it home. It had severe and I mean SEVERE root rot. The healthy mini Phal is doing just fine. Its even growing a happy little keikei. The sick one... Well it had one air root which dried up and died. The rest of the roots were smushy and actually fell off when I took the mini Phal out of the pot Agway had it in. It was just sitting in water... So I read 9 million posts on this site about how to get some roots growing again. I even went out and bought a book. I did the sphag and bag method and every single time (3 times to be exact) I try it, it gets this fuzzy mold that looks like cob webs growing on the part where the roots should grow! It has a basal keikei which actually fell off (I'm trying to save it but I don't know if its even worth it... It has no roots either as it relied on the the mother plant) So my question is what do I do now? I killed the fungus on the root part with hydrogen peroxide for 5 mins and cinnamon for a night as I read this in another post I think. It did fine after that (meaning it didn't shrivel and die but no new roots). If I just put it in orchid mix it gets really dehydrated. The only way I'm keeping it alive as of now is by letting the root part sit in a little cup of water with very diluted orchid food in it. I know orchids dont grow like this but I dont want it to die. Please help me! It also has black spots on the leaves... I just want to help it survive