Most definitely an advanced case of HVX. Dig it out, destroy it, sterilize all your tools and don't plant another hosta in that location. Put another shade plant there so you can't accidentally do it.
I poured bleach in where my infected plant was and then put an old milk can over the spot so I wouldnt replant anything there!! That was in 2007 or 08 and so far no signs of it anywhere!
"Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously."
2 Corinthians 9:6