I was moving a bolt storage rack in the basement, and when I took it off the wall, I noticed that the wall behind it was moldy. Then I noticed a ripple in the paint going all the way up, and when I followed it with my hand, the paint cracked off in a relatively well defined vertical path. I knew at that point the wall needed to be removed.
As I did that, I found very soft drywall, and the insulation behind it was blackened.
I removed it all, and I found some wood had been eaten. Then, I realized that a LOT of wood had been eaten. I'm not sure what I have here and how to proceed.