Ok soooo thats weird...
Ok first: GOOD NEWS EVERYONE! I managed to get my transformation reaction working!
Second: BAD NEW EVERYONE! There is alot of shit wrong with it!
The first thing is that the new Ork comes with no skills whatsoever.
The second thing is that it come with no clothes. Actually none of my Orks do!
The third thing is that it has no name its just Peasant.
Seems normal. It didn't have skills to begin with, I assume. Unless you gave it natural skill levels, then there is an issue.
By no clothes, do you mean the orks you start with too? Try adding [SUBTERRANEAN_CLOTHING] and [CLOTHING] to their entity if it is missing.
It doesn't have a name as it isn't a historical figure yet, and it is just called peasant because that is it's profession. After a few kills it should gain a name, and after some training it will gain a proper profession.
The forth thing is that it comes with a... tame tag. Its clearly a citizen, it can do jobs and it shows up in my units list as a citizen.
This part is odd. Is the ork that the squig turns into the same race as the orks you play as? Dwarf Mode has some strange logic surrounding intelligent creatures that are a part of your civilization, most commonly encountered in vanilla with non-dwarvern kings/queens. If it is the same ork that you play as, then I have no idea why it is showing up tame.
Is the tame tag part of their name or is it the job they are listed as doing in the unit menu?