Two days after transplanting, my decorative pumpkin seedling's cotyledon became twisted and whorled. Why? What does it mean?
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Totally normal. Way too much water. Are there holes at the bottom? What are you using for light? How many hours of light per day? Tell us about your lights. Looks like you used potting soil? Don't see any vermiculite or pearlite? But some potting soils don't use those in the mix.
Biggest problem I see is that soggy soil and baby plant. I would carefully transplant into fresh potting soil. Otherwise you will probably lose this baby to low oxygen,fungus. don't start soaking the soil until the plant has roots to fill the soil and do its part to suck up the water. Only water when the soil is almost dry. Part of the reason to start babies in tiny pots, upgrading to slightly larger pots...no tiny plant in too big pot,ever. Only sterilized potting soil, never use garden soil or compost in pots.
If you don't have real grow lights you won't be able to grow vegetables much longer inside. Very important, those starts will need to be acclimated for a few weeks to the out of doors environment or all your work will be wasted.
Don't worry about a little twisting. In the correct conditions, your babies will straighten right up...right amount of light, a little balanced fertilizer, great drainage, potting soil only in pots, acclimate before planting out of doors in prepared plant beds.
What are your plans?