Phal Seedling needs some expert TLC

[Jenn]

Hello guys...

I have a Phal seedling that I purchased about a month ago. It came in a plastic seedling pot in moss. I noticed that the moss stayed soaking wet, even though I withheld watering to give it time to dry. Yesterday, I figured I should check and see if there's some rot going on since it has remained so incredibly wet for such a long time. Sure enough, I was right. The longer roots were hollow and dead. There are a couple viable roots up toward the base of the plant that are seemingly okay right now, but do not show any signs of active growth.

I took it to a friends and she cut off all the nasty roots, which I was going to do, then put it in a small 3 inch clay pot packed really tight with moss. However, I'm not sure if this was the best thing to do for the little guy. What do you guys think would be best? Leave it alone in its current state in the moss and clay pot, or take it out of the pot and do the sphag and bag trick until I get more new roots?