If that wall is soft, it’s gonna have to go!
Cut a small square through the wall…maybe 6″ x 6″…in a soft area. Use a flashlight to inspect the wall cavity for other damage. Also study the back of the removed piece. Stick a mirror through the opening too.
If even ONE moldy area is found back there, replace that whole wall section with “greenboard” wallboard.
* Install or improve the bathfan capabilities. Make SURE it’s vented OUTSIDE, and not into the attic!!!
* Inspect studs for other water-leak sources…coming from roof leaks, pipe leaks, etc.
Sorry…but a squishy wall is NEVER a good sign!
Faron