Don't blame yourself or feel guilty. You're not doing anything wrong and he probably regressed just due to the trip to the vet. You are giving him a good home and you are being very patient with him! He is a lucky little bird! It's not your fault he was re-homed after 15 years or that someone completely botched his wings.
My Poi was a terrified bird from the getgo but was making progress with me until I had to take him to the vet about a week after I adopted him, at which point he regressed badly. I wasn't ever able to recover from that because he had ~20+ vet visits within a year. With Diggy hopefully it will just be the one vet visit so you can work forward from there and be able to make progress. Stay positive.

I'm so glad you brought up the manzanita perches! Manzanita perches are very slippery and are the worst for a fearful bird that is prone to falling. I had to ditch the manzanita perches I had when I first adopted my Poi and I replaced them with several rope perches of different diameters, a sandy perch, and two dragonwood perches. Honestly anything is better than manzanita and it's great that you've identified the perches as an issue because that gives you something you can change to help make Diggy feel more secure!
Honestly you are doing all the right things; giving him treats when you're nearby, minimal targeting, and just sitting near him and talking to him. Time and (hopefully) no further bad associations are the only thing that will help a fearful bird. It took time but my whole family is really amazed with Jimmy today because they remember how he just used to fall off his perch in fear if they came to visit but now I can put him on a t-stand and cue tricks like wave, turn in a circle, wings, etc. and he will perform for them. He's still a cautious bird but he doesn't fall out of fear anymore. No, I can't touch him with my hands and I can't get him to fly but even after 4 1/2 years I consider it a work in progress and one day I hope to teach him to be okay with hands and fly by using positive reinforcement.
Diggy will come around for sure but it will take time! I will share one thing I learned very recently that's helped improve my relationship with Jimmy that might help with Diggy. I'd been doing clicker training with Jimmy for about a year but it didn't improve his attitude towards me. Then I read something on the BirdTricks.com blog that helped. Now, I'm not a huge fan of BirdTricks.com mainly because I think their products are hugely over-priced and they make misleading claims but I have to say this idea worked really well:
Putting happy on cue.
Basically what you do is use capturing to reward a behavior that the bird is doing while he's happy and then you put it on cue. In Jimmy's case it was stretching his wings but other suggestions are: playing with a favorite toy, swinging, taking a bath, fluffing up, whistling, preening, shaking tail feathers, scratching its head, or perching on one foot. It really doesn't matter what you choose as long as you choose something that you know Diggy is doing while he's happy.
Since I "put happy on cue" with Jimmy he will actually solicit my attention which is
something he has never done. A few times a day he will run excitedly over to the perch closest to me and say, "Hey, birdie? Hey, birdie? Hey, birdie?" until I look at him, and then when I look at him he just stares at me intently because he wants to do tricks. He has never done anything like that and this is new behavior as of February 2013. You have to understand that he knows other tricks such as wave and turn in a circle but over the past year he
never would "beg" for treats using those tricks or solicit my attention. It's very different now that he knows "wings" and I have to give BirdTricks.com credit for giving me the idea to essentially "capture happiness." It worked with Jimmy in a huge way. He still doesn't
like me but I have noticed since I "put happy on cue" that he actually spends a good amount of time sitting as close to me as possible whereas in the past he specifically sat as far away as possible. He even solicited a head scratch from me yesterday (a first!) but I am too scared of a bite so unfortunately I had to turn him down.