I use a modified Japanese method. I do not make an air pocket in the moss. I grow them under fluorescent tubes with a oscillating fan nearby. I do not water until the moss is crunchy. They get a dunk for a few minutes in a rainwater light fertilizer solution. I think that it is important to water appropriately no matter what medium you plant in. Mounting is fine if you have the time to mist your plants at every day or twice a day.
Back to your problem, I think that the only way to save it is rather radical surgery
1. Remove the stem and all but the top two leaves ( as they appear to be the only ones with out signs of rot)
2. Dunk in a liquid fungicide for 10 minutes
3. Dust with Sulfer or charcoal or cinnamon
4. Let dry for one day
5. Pot in small amount of Sphagnum
6. Place a baggie over the pot and cut off one corner
7. Mist when
dry with a liquid fungicide
8. Place in lower light out of direct sun