Yes, Chickie, your fish is definately getting sick...not only will he continue to deteriorate but the second fish will also become sick. The pet store will have medication to help your fish...just tell them his symptoms. The med bottle will instruct you to raise the temp in the tank slightly and increase airation...more bubblers. Follow the instructions exactly as they are on the bottle about dosage (goes by tank gallons) and later about dilution, as in water change out, until the fish are back on just fresh water. They will not recover with out action.
Your tank looks good, you take good care of it and nice set up.
Do you vaccume the gravel when you do your change outs... use a syphon that can reach into the gravel. Tiny pieces of waste and uneaten food accumulate under gravel where you cannot see it. This raises your nitrite level (bad). If you have an undergravel system, tiny bacteria uses this nitrite for food changing it to nitrate (harmless).
I used to do a complete tare down every year...scrub everything (with salt), especially gravel, while the fish are in a small holding bowl.
pH is very important to watch; with goldfish it raises quickly, lowering thier ability to fight off sickness. Frequent water change outs keep everything in perspective...
As for food, gold fish flakes are nutritionally balanced, they have all the vitamins your fish need. Pellets are also but are more aimed at outside pond fish and usually cloud the water. Keep your worms for treats as I know they love 'em. Fresh food is best but you must learn about nutrition content and include everthing they need....flakes are just easier.
Finally, do you ever add aquarium salt. Yep, salt. Every living creature needs salt. Just remember only add it once; your water will evaporate but salt does not. Your fish will hover over it and pump thier gills...mine even picked it up. Helps them asorb more oxygen. (salt kills snails though...so if you have snails in there don't do it).
Fish are fun...hope yours get better soon. Good luck. Keep us posted : ) Sally