Morphing is obviously a concern, please do keep us updated!
All the options seem pretty feasible...he does look a little wobbly even when he is in the water, so he might well have a neurological disorder, but I'm not sure how common they are in axxies or how you can tell. As for the bumping against the glass, I don't think that's a concern as Toothless does it. I think it's because their eyesight isn't the best (it took mine 2 days to figure out that there was food INSIDE the feeding jar rather than on the outside)!
I also noticed that Darrel has, or had, a very long tail and body. I've never seen an axie that long that wasn't also quite chunky - he looks rather slim and lithe. I just don't know how he could have started morphing. The only thing I could suggest is to put him in another tank without the land bit (I understand why you have it, but maybe him going up onto it is encouraging him to morph, and if he is one of these hybrid ones, it might not take much). I know tanks cost a lot of money (hence why mine is in a 6 gallon for the moment) but putting him in there and observing is your best bet. If he's coming up for air all the time (more than once or twice an hour or so) then he might well be morphing. The tank you have him in currently has crystal clear water, so the only reason he's probably coming up to the surface is because he can. Maybe a new tank will encourage him to use his gills and tail and reverse the morph?
Good luck with the wee guy. I hope you see some improvement soon.