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I just discovered that my sill plate and joist setup is different than others I've seen (and I was a Realtor, so I've seen a lot of sills).

sill plate

As you can see from the picture, there's a gap between the exterior board and the subfloor. Covering that gap, on the exterior, is just some tar paper and vinyl siding. So as you can imagine, cold air here in Maine is just pouring in.

I have two questions - is there a potential structural issue? and what should I do to fix it? spray foam? cut 2 x 6's and attach to inside?

More information: house built in '78, floor joists are insulated, area is a crawlspace, joists rest on on full length steel I-beam.

Any help would be appreciated.

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There should be no gap. Looks like shoddy construction.

See figure 16 from this page for proper alignment:

enter image description here

Also I have never seen a "band" or "rim" joist that are configured in the fashion described by your image. It can't be good that half of the wall is resting out in space.

You could rip a board to fit the gap so that the weight of the wall is transferred to the foundation evenly, but I would probably call a professional to see if that option is even structurally sound. I would not fill it with spray foam. Fix the structure first, then insulate.

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Another issue is unless the band or rim joist is pressure treated or redwood or otherwise resistant to decay, it will be very prone to rot where it sits on the concrete. If you can't determine adequate resistance, it should be replaced completely. –  bcworkz Jan 26 '13 at 0:43
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