This is where LNABs and patronymics get tricky. It is indeed Madoc who was "fychan" or "the younger", and we can be confident that when Madoc was born, those gathered around at the moment he was named did NOT say, "his name will be Madoc Fychan." So Madoc acquired the designation Fychan at some point.
(anything after the "ap" refers to the father, not the son).
However, when his son William was born, was Madoc already known as Madoc Fychan, Madoc the younger, to distinguish him from others? If he was, then I would vote for "William ap Madoc Fychan" (William, son of 'Madoc the younger') as the LNAB, since Madoc Fychan was probably the name his father went by at the time William was born.