Most likely that was just the lining of the egg and a little bit of left over yolk that needed to be absorbed. If you look closely at the first picture you can see a little area where it almost seems to thin a little, that's where the yolk sac starts. You can tie a piece of string or dental floss here to cut the blood supply and prevent bleeding (like an umbilical cord) if necessary, and the yolk sac will generally disappear quickly after that. Unfortunately, the chick probably died from infection due to the washing and handling due to that open area. If this ever happens again, apply a wet paper towel to the area and stick him back in the bator. I personally tie my chicks off that have this problem and cut the extra off.