The fins might look like that from past fin rot or him chewing his tail. It could also be from plastic plants, did you ever have plastic plants with him? Sometimes they get their fins caught.
The rule is not "one fish per gallon" but rather "one inch of fish per gallon" so even if it was true the tank would be too small. Anyway, that rule is made up and kind of ridiculous...after all, let's say you have a 10-gallon. According to the rule, having 10 1-inch tetras is the same as having a single 10-inch Colombian Shark. Except the poor shark wouldn't be able to move
. It's better to look at the big picture...species of fish, filtration, water change routine, etc.
There are two issues with Bettafix. One is that some bettas can be sensitive to it (yours must not be one of them). It's mostly anecdotal evidence but the belief is that it has to do with bettas being labyrinth fish (fish with a special organ that allows them to breathe air). I take it all with a grain of salt but I have heard some horror stories, too. I've used Melafix on bettas before (this was before Bettafix was sold...they're the same) without any problems but now I'm hesitant to suggest it for labyrinth breathers. It can be useful for other species, though, like goldfish.
The other issue is that it's not a medication but many people treat it as one. It's supposed to speed up healing and help prevent infection but it doesn't "cure" anything nor does it always work. I believe it does usually work (some people disagree and think it does nothing), just not as a real "cure".