From Guitarists description of the pressure it's putting on the leg it seemed prudent
to remove it to a warm, but less humid brooder. It would dry quicker there.
Both sides are inside? Oh wow. I've had plenty of chicks born with organs on the
outside. None made it.
Put it in the brooder to dry. Wait until morning. It could just be useless flesh.
A chicks organs are still forming, even after hatching. It's either gonna improve
or the chick will...
My call would be too loosen the "whatever it is" around the foot. Cut it only if you have
too. Then watch it for a day before making the decision to cull. Chicks that young will
usually die quickly on their own.
Best of luck.