We gutted the inside of an old unventilated bathroom, and found extensive mold throughout the drywall and insulation.
The exterior sheathing is old horizontal planking (probably dating back to the 50's or earlier). While solid and free from rot, it is covered in mold and appears to have curled/cupped extensively, probably also due to extreme moisture and humidity problems.
Notice the curvature of the planks - this is not a log home!
We bleached and scrubbed the mold as much as possible, but it still seems to be causing allergy problems for some people. Also, we can't solve the cupping issue without taking down the layers of exterior siding.
Should we just bite the bullet, remove the siding, and replace the old plank sheathing with OSB or plywood? Or can we leave it the way it is?
Update: There are two layers of siding - the inner layer is some old asphalt paper/shingling, and the outer, newer layer is vinyl. There may be a thin layer of pink foam (house wrap?) under the vinyl on top of the asphalt. The vinyl appears to be in good shape and is not permitting any water intrusion from the outside. This is a single-floor room with a simple shed roof above us, which drains toward the wall in question. The sheathing boards appear to be about 1/2 - 3/4" in thickness.