I haven't had success with sphag and bag either, and like Philip had problems with mold when I tried that.
The advantage of mounting is that I've found that quick drying roots with very frequent watering seems to be apreciated by strugling plants, especially if you have at least some root (which you seem to have in the form of an arial root).
However, mounting might be difficult if you've not done it before (OK I might be biased from being scared of actually mounting something myself). Also remember that with mounts you have to think about where you are going to grow them. I do have 4 mounted orchids which I bought that way and the problem I have is that they drip drip drip after watering and I don't have time in the morning to wait for them to stop before putting them back where they grow... therefore they either grow outside (not possible in this weather) or they are in my mostly tiled bathroom so they can drip drip drip on the windowledge without damaging my walls/wooden windowledges. If you can mount on something that will stand on it's own, rather than hang then you can stand them on saucers, but mine are all designed to hang and so I hang them on the sides of other orchid pots and let them drip on the tiles.
Another consideration is that mounts need daily attention and you need to think about whether that's something you want to do.
So... my method would be as follows, and the fact you have at least one arial root is good and gives it more chance than with none. It requires daily attention to begin with, but once it's recovered it can go back to more like weekly.
I would pot it in a tiny tiny tiny tiny pot. I have some which are just 5cm pots and they work great for rootless or nearly rootless plants. If it has problems standing as a result of the small pot then use another empty pot outside it to help it stand.
If you can't get a tiny pot then try a standard size yogurt pot (you know the sort sold in the UK in trays of 6 for plain old non-fancy yogurts). Makes several holes in the bottom, and even slits up the side would help.
You will need some medium and I would not be inclined to re-use the stuff it went rotten in as that could be too broken down. This is a difficult bit, because in my experience the stuff you can buy in garden centers can actually do more harm to the roots. I get mine from
www.orchidaccesories.com and it's good quality.
If you can get the remaining roots in the pot without breaking them then do so, otherwise leave them out and just poke the base in.
Now what you really want is for the medium to fully dry in just a couple/three days (hence the reason for the teeny tiny pot). You then want to water regularly, just make sure it's dried between waterings. If the arial roots are out the pot then spray them with water whenever they look silvery (they go green when wet). If no roots are in the pot then perhaps don't water so often but spray the arial roots.
Until you can get hold of new medium/pots keep spraying the arial roots when they are silvery. This is likely to be at least daily, possibly twice a day. Just make sure the center of the leaves (where new leaves come from) is dry at night as leaving water in there can lead to crown rot.
I rescued one with only a fraction more root than yours using this method as well as others with a bit more root than that.