DutchLady is absolutely right on what to do. From the picture it looks like just one area of rot. When you water, try not to wet the caudex of the plant. I have one that I did the same thing Otis probably did. For some reason too much water accumulated in the area causing it to rot. I did what DutchLady said and my plant is fine. It calloused over in that spot and I'm careful not to pour water right on the caudex. You can see the spot in the photo.
