So I'm not sure what happened, the new root died, and the remaning leave turned all mush with water filled blisters. Then the tiny new leave in the center also turned mushy. Could this have been crown rot? Anyway, I'm not sure if there is anything I can do now, I saw some posts of keeping them in a container and putting them in the dark with some moss or chips. Maybe I'll try this. All my other orchids are doing fantastic and growing new leaves very fast. I guess I messed up with this one at the start and there was no hope for it.
Mush usually means some sort of bacterial infection although I don't speak from experience with that problem. It sounds like you may have to give up on this one although you made a valiant effort! There is a risk of infecting the others too and you don't want that.
Take it as a lesson learned to better grow the others. Make sure not to over pot and only water when the media is dry. Also keep water out of the crown of the plant. Follow these rules and figure out your own environment and your Phals will thrive! A bit of a chill for several weeks in the fall will help induce bloom spikes on a healthy Phal usually.
In regards to the amount of sunlight your phal receives, since we live so far above the equator that often full sun doesn't burn the leaves. Currently mine orchids get full sun, south facing from morning until night. Only two I moved a bit farther back, but none have gotten sunburn. I have dendros, catts, and phals. So open your blinds, it might help with the rot setting in on your leaves
invest in a small oscillating fan for air circulation....humidity is not our issue in the east coast....so easy on the watering...
at first I was thinking edema of the leaves but looking at your pictures made me agree with Silken on bacteria infestation....because it happened too fast!
try to spray it with hydrogen peroxide
too bad you are in Toronto or the best spray is physan 20 or phyton
you need to bring out the big guns if the bacteria is too fast in killing your plant