You and lots of people are confusing two issues: arresting lots of people and how they're treated in prison.
Yes, arresting tons of people probably did help with the murder rate - even if there's some debate there. (If the government struck a deal with the gangs, then long-term they might just have engrained the gangs into society more. But yes, rates are definitely down now.) And I did mention before that experts say that a higher chance of being arrested does work as a deterrent against crime.
But: once they're off the street they're off the street. What's the purpose of dehumanizing them in prison? Experts also agree (from what I've seen) that heavier sentencing and harshet prison regimes do not work as a deterrent (regardless of what people instinctively believe). Further, comparing prison regimes around the world shows that harsher environments actually mostly lead to further criminalization of inmates and hence high recidivism rates. Yes, those prison regimes are cheap to run, but over the long run, that exacts a heavier price (socially and economically) on society than running nicer prisons, which are more expensive but return people to society in a much better mental state.
So, if you look at the original post: what's the point of these awful prisons? Sure, it's cheap and it feels good for anyone who's been a victim for this - but what will El Salvador gain from this in the long run? (Again, the counterargument is not that at least these people are off the streets. They've been arrested so that's a given. We're talking about what's happening after, when they go to prison.)
Also, the options are not either Norwegian (relative) luxury or these prisons' awfulness. Obviously, 'decent circumstances' is relative to what's considered decent in the relevant country.