First, thank you for everyone's support and guidance, I am grateful to have such a supportive community. 

I've been observing the plant and noticed that the bark seems to be drying out, which I fear is the possible cause of root rot or the plant not being able to absorb water and other nutrients. 

Back to nursing the plant back to health:

I understand that I need to let the soil dry out completely. However, while the soil is moist. Should I gently rub off the soil to inspect the roots?

or, shall I let it completely dry out, and start to gently water the plant? 

All the leaves have fallen off but there is still life, I see som new growth happening that's green.

If it was my plant, I would call it a failure, scrap it and  move on with other more promising materials.

It may sound harch. But really, it will take a lot of time and effort to get this plant back to health. and when back to health you are still stuck with a blob trunk that is really hard to make into a bonsai.

: (  that's a tough pill for me to swallow.

If I bought a new one, should I repot immediately with the soil mixture recommend on the site?

I will not change my mind on repotting just because you get a new tree. Maybe someone else can tell you what you want to hear?