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Thx JayWelcome to Reef2Reef!
That does look like an injury, but I can't explain how it could have happened - the usual cause is being caught in a net. The tang is also breathing heavily, is the tank aerated well? Is the water testing good? Any other fish in the tank with it?
You might consider a broad spectrum, gram negative antibiotic, but that won't address the rapid breathing.
IMO - "observational quarantine" is risky. If the fish develops a disease, you then have to try and stop it after it gets started, as opposed to a preventative quarantine where you stop the disease issue before it gets started. Also, fish can harbor some diseases with no real symptoms. You then think they are "clean" and add them to your display, and the disease gets carried into it.
Jay