Well, the tang looks like it’s had a rough life. I think the previous owner is correct that the condition is a result of chronic stress… probably from inadequate nutrition. However, I don’t think the fish is necessarily doomed from this point on. Proper and constant water parameters (low nitrates, constant salinity), freedom from harassment from other tank mates, and a proper diet should bring the fish around. From the picture, it doesn’t look like there are any open wounds, fungus, or other infections. It’s hard to see from the picture if the lateral line is deteriorated, but it doesn’t look too bad off. The dorsal fin will never grow back, but I wouldn’t be surprised if the fish’s color does. The main thing to watch for is other, new, disease with this fish. Clearly it is immuno-compromised since it wasn’t being properly cared for and recently went through a move and likely (hopefully!) a change in feeding and maintenance. Keep an eye out for ich in particular.
Tangs need a well balanced diet with a focus on “green” foods. It would do well with the addition of some living or natural dried marine algae. I like Sea Veggies (green top container, by Two Little Fishies?) in the flake variety or on a clip in the tank (removed before it fouls). Formula-two by Ocean Nutrition is widely available and formulated for herbivores (careful cause this food can be messy, defrost the cubes whole and crumble into the water, don’t soak in tank water). These foods should be supplemented with a quality frozen mysis shrimp.
Just as a final disclaimer, since you are new to marine systems. Fish medication should never be used in a tank containing live rock or invertebrates (your hermit crab, also snails, starfish, coral, etc.) All of these animals are sensitive to the copper, dies, formalin, and other ingredients in most medications. Marine fish are best treated in a separate tank and ideally quarantined before introduction to the system. Don’t be tempted to use medications or other products prophylacticly for this fish…. Just good food, clean water, and shelter.
How do the other fish look?