Basal rot on Cycnodes Wine Delight 'GEM'?
 

I got this about a month ago. The old pseudobulb is about 2.5 inches tall. It is in Sphagnum. Is this basal rot? It does not seem to be exactly on the base of the bulb and does not seem to have yet affected either of the other two. What do I do? Do I cut my losses and carefully break off the sick pbulb and cover the wound with cinnamon? The new pbulb is probably about half grown. I might just do what I said above because these type of things spread quickly from what I've read. Any advice will be appreciated. Thank you.

Not basal rot. Do not cut.

What if the brown is a wee bit softer than the surrounding green?

It looks like the bulb is simply sending its nutrients to the plant. The bulb will turn light brown to yellow-brown and shrivel up slowly. Once its dry you can pop it of. If you see black, then its rot.