My advice would be to do everything you can to keep your current PD on your side, or at least not working against you. In what way is he impinging on your ability to find another spot? Can you really blame him for not wanting to let you go and do away rotations? A lot of programs don't let their residents do away rotations at all, as there are issues of Medicare funding that come into play beyond the simple issue of needing you to work at their institution.
The fact that you said in the past that your PD is or was amenable to writing you a letter for Neuro makes me think that he is being fairly reasonable about the whole process. While I agree that "talking" to a lawyer is absolutely in your best interest (at least better than listening to random internet advice), if your only complaints are that he won't let you do an away rotation and that he isn't being nice, then I don't think you have much cause of action. Unfortunately, residency programs are within their rights not to renew contracts. Also unfortunately, there are no rules stipulating that the program must facilitate your search for another position.
I don't think you absolutely need a letter from your PD, and it sounds to me like you wouldn't necessarily want one. However, prospective programs will invariably contact him to discuss your current situation. Even if he is being slightly to moderately unreasonable about things, they will listen to what he has to say. Again, better to have him on your side.
Good luck!