Belive it or not that's a good sign that the iodine did what it was suppose to do. The dead tissue will regenerate. You can keep the water very clean buy doing everyother day water changes for the next week and add aquarium salt dosed at 1 tablespoon per 5 gallons of water. Remember to add salt to replace what was removed by the water change. The tail will grow back don't worry. Here's a little info on Iodine. Keep the faith.
Povidone iodine belongs to a class of antiseptics known as iodophores. These chemicals exert their antiseptic effect by slowly releasing iodine. Antiseptics (sometimes called germicides) are chemicals that kill or prevent the growth of microorganisms such as bacteria, fungi, viruses, protozoa and bacterial spores. Povidone iodine is used for the treatment or prevention of infection in minor cuts and abrasions and small areas of burns. It is also used for the treatment of fungal and bacterial skin infections. Direct contact with this compound disinfects wounds and prevents secondary infections. Infected tissue absorbs the disinfectant and is stained red-brown, making it easy to monitor the healing process. It is especially useful as first aid treatment for mechanical injuries and for treating fin or tail rot.