Hi mmgsport: Welcome to All Things Plants!
I agree with Ken, it looks like too much moisture is the issue.
Jade Plant (Crassula ovata) like most cactus/succulents prefer a very well draining potting medium. The container (to my eyes) looks too large for the plant and the soil looks saturated; does that pot have drainage holes in the bottom? As Ken stated, you will need to remove all soft, mushy stems or the rot will continue upward until the entire plant is lost. I think the Cactus, Palm potting mixture is okay but I'd still add more grit to help with drainage. Perlite or Orchid Bark Mix (which contains perlite, bark and charcoal) can be purchased at Wal-Mart, Home Depot etc. and mixed with the potting soil which will make for a faster draining potting medium.
I can't really tell what the insect is that you found in the soil, but it looks like a moth to me and I doubt it has anything to do with the plants issues.
