Is that the umbilicus not closed up? Like when the shell is attached and maybe the chick pulls/drags it too far thus seeming to pull out from the 'belly button'? That's what it looks like to me-I'd say give it a shot at healing if so. If the other chicks are running around already I'd just keep this one separate to keep others from picking until it heals/absorbs/dries. I use a little basket with lots of holes turned upside down over the chick needing 'alone' time so it can still be in the same brooder. I hope it does great cuz it doesn't look too bad-cute little bugger!;-)