Does anyone know what is wrong with this tree?

I was told when I bought it that it was a magnolia, with pink/purple flowers. It was doing just fine until a few weeks ago the leaves started looking unhealthy, almost moldy or something. Can someone tell me what is wrong with it?

if you see a whitish fuzzy growth it could be powdery mildew. Can you get a close up of the leaves?

I have seen that sort of grey- and brown look, after an outbreak of powdery mildew.
The moldy look that you saw several weeks ago could have been that.
I have also seen that grey effect when the plant has suffered from lack of water for a short time. Not long enough to kill it, but enough that the leaves got sunburned. It would not have looked moldy, though, if it was sunburn.

Those leaves will fall off, and the plant will go dormant (it looks like Magnolia soulangiana).
I would spray it then (when it goes dormant) to try to minimize any fungi that are trying to live over until the spring, then spray again as the new leaves open. Fungicides work by protecting the new leaves, not by killing the fungus after it has already gotten in.

Thank you! So you think it will live over the winter, even if it is in a pot? I know I am in SC but I still have the mentality of a northerner. I would have freaked out when all of the leaves fell off if you hadn't mentioned "going dormant". I thought they kept their leaves in the winter?

Is it Magnolia soulangiana?
There are deciduous magnolias and evergreen.
What zone are you in? I am pretty sure SC is mild enough to keep them outdoors in pots over the winter.
These plants get big, though, and will need to be transplanted into a much larger pot, or the ground.
How much larger a pot depends on the species.

I am in Charleston so about zone 8. I am unsure what type it is. It gets pink flowers if that helps? I have a close up of a leaf, too. I was told when I bought it that I could kind of dwarf it by keeping it in a pot... I guess that wasn't entirely true then?

Well, the leaf does look like M. soulangiana, and most varieties have some combination of pink and white flowers, very showy.

A plant in a container can be kept small, but not simply by keeping it in too small a container. It needs regular pruning to keep it smaller, and eventually it will outgrow the container anyway, unless you are skilled in Bonsai.

What size container do you want to keep it in, and what size can you allow the plant to grow to?
With careful attention to fertilizer and water you can generally keep a plant in a container that is about half the size of the leaf mass.
For example, if you want the plant to get about 4' high and wide, then a 2' diameter container is about the smallest I would want to try keeping it in.
This is for a couple of reasons: It is a nightmare to keep up with the watering needs of a plant in too-small a container. The soil simply cannot hold enough water for the plant.
Also, it becomes top heavy, and will blow over all too easily when the container is not heavy (ie large) enough.

Hm well the container it is in is 2' in diameter. I wanted it to stay small, at MOST 4' high and wide! But I just read online that this is a 30' tree when not in a pot! Obviously the lady I got it from didn't know what she was talking about. Perhaps I should simply plant it in the front yard but I am still really concerned about the moldy leaves. Do I need to take care of that somehow before I plant it or will planting it help "cure" it? What if it doesn't lose its leaves this winter? Will the above remedy still work?

Powdery mildew is a fungus.
The spores land on the leaf and start growing into the leaf. After a while the fungus gets ready to reproduce and grows back out of the leaf. This is the while moldy or powdery sort of look the leaf had. It is already infected by the time you see this phase, and the infection is inside where you cannot treat it.
The internal damage is the part that turned brown after the spores were shed.

To prevent powdery mildew you need to spray the new leaves as they are opening. This will happen next spring. By keeping some active ingredient on the leaf surface you are prevenint the spores from entering the leaf.

It does not matter if the plant is deciduous (loses its leaves) or evergreen (holds it leaves). The ones in the picture are way past the age of spreading the fungus. The fungus is all over the place anyway. While removing infected leaves can help it is not going to totally prevent the spread.

You could probably keep pruning the plant for a few years to keep it about 4' high and wide. They are not that fast growing. But I do not think it will work for very many years. Maybe up to 5 years? Maybe less. And I do not think it would look really nice kept to that small size.
Much better to plant it in the ground and fully enjoy it. I think it would flower a lot better in the ground.

If you are looking for a plant that only gets about 4' high and wide, or is easily pruned to that size, then I would look into shrubs that might grow to 4-6'. Starting with something that could grow to 6', and keeping it at 4' would be a lot easier than trying to keep a 20-30' tree down to that size!

If you are specifically looking for pink, then look into these ideas, and make sure they will grow in your area:

Anisodontea hypomadarum.
Roses. Bush or tree type.
Escallonia Terri or Compacta
Boronia
Rhaphiolepis- several varieties in shades of pink to white. Watch out for the sizes! Some get too big.
Hebe- some are pink, many are purple and white.
Erica- a very large group. Most are smaller shrubs, but there are a few that get into the size range you are looking for.

If somewhat larger could work, then these have MUCH larger flowers, but could not be kept to 4':
Hibiscus rosa-sinensis, or H. syriacus
Lavatera (some flowers closer to lavender in color)- look for the smallest varieties.