Update from referee for what it is worth: it was a fumble.
QB's hand was not moving toward the LOS when first contact was made by #18. Interestingly, he said it would have absolutely been ruled a fumble initially then reviewed post play to determine whether it was an incomplete pass (I don't recall what the ruling was on the field but he was 100% sure it should have been deemed a fumble initially because instant replay was in effect).
He focused on something I had missed: it doesn't matter if his ARM is moving forward; the question is whether his HAND was moving toward the LOS before #18 touched him. Early in this thread, someone posted the rule but the language was, I believe, the old language that referred to "arm or hand". The new language is below:
When a Team A player is holding the ball to pass it forward toward the neutral zone, any intentional forward movement of his hand with the ball firmly in his control starts the forward pass. If a Team B player contacts the passer or ball after forward movement begins and the ball leaves the passer’s hand, a forward pass is ruled regardless of where the ball strikes the ground or a player (A.R. 2-19-2-I).
The underlined section is actually underlined in the NCAA rulebook because it is "further clarification" of what constitutes a forward pass. My guess is that they removed the language about "arm or hand" so that sole focus was on his hand. This guy is certain this was a fumble. Said it would likely be addressed during the Big 10 referee conference this week and identified as an error on the field (if it was initially ruled a forward pass) and, he believes, an error on the replay review since there is nothing to suggest his hand was moving toward LOS. Remember, the default is fumble because instant replay is effect.
Interesting. FWIW this was the same guy who told me two years ago that the Big 10 would find fault with the ejection of Brandon Smith from the Michigan game and likely apologize to PSU for the error. He was correct on that one for sure.