NEVER SEEN ANYTHING LIKE THIS???

[Wet Whiskers]

I would get that guy in a quarantine tank and do frequent water changes. Is he eating? If so, make sure you are feeding something with vitamin C in it. Apparently, Hole-in-the-head has been possibly linked to a deficiency.
Is his feces normal?
If not, and its white and stringy he may have hexamita, an intestinal parasite. There is some debate as to whether or not it is linked to hexamita, and thus treatable with metronidazole. However, cultures of the holes have not been shown to actually have any bacteria or parasite in them. As a result, the correlation between internal hexamita and hole-in-the-head may just be due to the inability to absorb vitamins.

If you want treat with metronidazole, please note that it is not well absorbed by fresh water fish. Oral metronidazole is much more effective. Gel-tek has great products which can be mixed with food; just make sure to let it sit for 15 minutes or more before you feed it.

Hope this helps.

 

[CHOMPERS]

Yes, it is a hole...and it is in the head. But that is not Hole-in-the-Head disease. HITH does not form like that and takes way longer than three days to do that. That is more classic of boring parasites, however, I have never seen anything so severe. Normally the hole left after parasites is closely the same as the bump before the erruption of the larvae. If it is in fact a parasite problem, then the whole tank should be treated (Copper Safe). Definitely treat the hospital tank with Copper Safe and a broad spectrum biocide (bacteria and fungus) to prevent secondary infection.

An exact diagnosis will require a biopsy and a microscope (I don't expect you to have access to one, just saying). The next best thing is to treat with a high quality medication such as All-In-One. This is no time for cheaper meds such as Jungle products or Melafix.