How to recover from old water damage?

[MangeKl]

Hello hello!
I spent a lot of time here when we bought a house 5-6 years ago, and now the forgotten parts are due for renovation, and I've encountered some problems... When we bought the house, there was a moisture damage in one corner. Now, the foundation (mullbänk/almost crawl space) has been torn up and excavated. I've started tearing into the wall to see how much is damaged there. Now to my questions...
My thought is to not tear higher than what's really necessary... But how much actually needs to be removed?
As mentioned, it's an old moisture damage, no moisture at present. Also insects that have fed on the wood.

What's the best way to restore it?

Attaching some pictures...
Picture 1 shows how it looks... Closest is the horizontal panel, which is in fairly good condition. Then there's fiberboard insulation, followed by vertical planks against some form of plaster.
Picture 2 shows what the vertical planks look like, photographed from below.
All good tips and advice are welcome!!!

 

[Rabbithole]

If the moisture is gone and it's not load-bearing parts that are affected, you don't need to do anything. Remove any mold and rebuild so it looks nice. As long as it's dry, nothing will happen.

 

[MangeKl]

Nah, everything is dry now. But one wonders how the heck they built this wall...differs significantly from the rest of the house!