I think that is what happens when the embryo drowns, but I am not sure. We had an egg that did the very same thing, and we were thinking that it was because it got turned. It could have also just been infertile from the get-go, because the egg this happened to had just been laid (not sure how long it was in the cage), so we really have no clue what caused it..
There was a thread with some pretty good pics of this happening to someone else awhile back (in March I think). I am sorry to tell you that the egg did fail, despite of the many efforts of the caretaker. I will try to find the thread for you..
I threw it out.It was squishy and covered in red slime.I have two eggs that have been doing good.They are a few weeks old and when you candle them thet glow red,so I am crossing my fingers.I have never hatched anything before!Thanks