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This section of the stem has looked constricted/oddly shaped since I purchased it a few months ago. It was otherwise heathy until yesterday. It looks like it is draining and becoming squishy. It turns yellow then brown. It's happening rather quickly and I'm concerned that it may spread to the healthy section if I don't intervene.

I've watered and fed it every 3-4 weeks with no problem. I keep it indoors at a fairly sunny window. It's been growing like crazy until now. It is still a small plant, about a foot tall.

Any ideas what this is? Disease/malnourishment?
Should I remove this section?
How (and where at) would I do so?

Pic of day two. It's spreading.

It is rotting. Get a clean; sharp knife or pruner and cut it off at the next node. It should be a clean cut. Make sure the end calluses off. Watch your watering.

Do I cut just below the rot, or all the way down to where I have the ribbon at? Sorry, I'm not too familiar with these plants yet.

You can cut it by the ribbon. You can actually cut it as long as it is in a green part but that would leave a larger wound to seal. The node will leave the smallest wound.

Because the plant is still so small I decided to cut just below the rot rather than at the node. My cut was a little uneven, but it seems to be drying and getting crusty. So far so good. Thanks!