Does not look so good that is for sure. Could be so many things. Kinda sounds like a localized bacterial infection, but it could very well be parasitic or viral. The question then becomes do you want to treat the fish and how ? Treatment in a display tank is almost always a bad idea, but you can use some oral medications without problems. Treatment in a fresh QT could put him over the edge as well. There is not a easy answer. As long as it does not appear to be contagious you may even want to take a wait and see approuch. It all depends on if he can still actively eat I guess. How old is this tank and do you have any current parameters.