Your Oscar with HITH needs treatment. If cared for properly, HITH should remit and your fish will have scars but no illness.
I would forget about breeding at this point.
A Hospital tank would come in handy, say a 2 or 2.5 footer 30gal tank if your Oscar is under one year old and/or less than 8" long. Otherwise I would go with a 4 footer 40-50gal hospital tank.
White tissue on the dorsal area is not a good sign. If you post a pic it will be helpful; however, your fish is likely to have an open wound and opportunistic infections may occur.
If you can not set a Hospital tank, then this will take a lot of effort, but if you are somewhat persistent you may pull this one off.
As necromancer said, keeping "perfect" water parameters should be your first line of treatment, as well as protein rich food. I would add spyrulina based food too, to enhance your fish immune system. For the time being do not feed live food.
Schedule every other day 30% partial water changes if your nitrates are around 25ppm. If at 40ppm, then go daily. Aim at keeping your cycle intact. Be careful with not over-cleaning.
Not seeing fish behaving aggressively is not a sure way to rule out aggressive behavior in your tank. There seems to be evidence of it due to the presence of your injured fish. I have seen my fish changing their behavior when they notice me around versus when I watch them while they don't see me.
There is some disagreement on what causes HITH, which is a symptom, but there seems to be consensus as for water quality and nutrition in both prevention and recovery for HITH.
If your fish is in the early stages of HITH it is likely that will heal without using medication. If you see no improvement you may need to consider using meds.
Please give some thought to the idea of keeping just two Oscars and not three in your 118gal tank. Also contemplate a plan B for your terror (is it one red-green terror or one red and one green?). Your catfish and parrots should be fine with your Oscars.
My Oscars are paired off and they have their territory on the Left side of the tank, they breed there and no one dares to mess around. However, if I don't get the newborns out, they will be eaten by the other fish as they get away from their parents. Population control works in both directions.
Pepe
Santo Domingo