I'm extremely glad that I decided to rewire my basement and install insulation and redrywall. It allowed me to find all the nasty traps hidden in the basement and it explains a lot of the stuff I see.
My problem is that I found one corner with water damage, not horrid damage, just a corner where the plywood is soft and it also happens to coincide to the place where my gutters aren't working. I also found an insect infestation - nothing horrid, but I wonder if I found a nest of cockroaches or simply a bunch of beetles. I suspect beetles, as I don't see the smaller casings that a cockroach would leave. I also found a bunch of ants hiding out with the beetles and the most vile looking spider I ever saw. They all took a trip down the shop vac tube before I got a chance to take a photo of them - so I wasted that opportunity to ID them.
But here is what I'm faced with http://photos.imageevent.com/eigenvector/houseideas/websize/PB040062.JPG
That's the corner is question. The chalk line denotes the edge of the soft plywood. Should I fill the gaps in the corner with caulking, should I apply an insect treatment first?
I'm not sure if that's insect damage or a funky 2x4 - like where the bark was.
I'm assuming that's where the insects are coming in from. I presume the window was installed after the framing was put in, that might explain why the foundation is like it is only under the window.
The plywood is pulling away from the studs, is that a problem or normal for a house. Would filling the gap with caulking prevent further infestations?