I think it's your soil.
Organic matter is a good thing, but when you get lots of none decomposed stuff like that, especially lots of tree bark, all the microbes in your soil that are trying to break the stuff down for your plant, end up using nearly all the available nitrogen to do it. So a plant gets anemic, especially a young seedling. So that soil is really bad for what your doing.
Can you get your hands on some Fox Farms Ocean Forrest? It's not perfect, but lots of places are selling it now, and it works good for pot. I know some folks who use it, like to add a bit of perlite, up to a third at the most, so that you have better oxygen to the roots.
It would be tricky to safely transplant that seedling out of that stuff, but you are going to be fighting issues for a long time in that stuff, and I think the combo of the decomposing pot, would hurt it even more.