Causal agent
Addition completed in 2000, photo taken in 2009. Fungal decay (organism not id'ed) is extensive.
It appears from the photo that untreated wood is in contact with soil, which is very poor practice. If not in direct contact, foundation was not high enough and/or drained and vented enough. Eaves were insufficent (2-storey structure) to prevent continued wetting of base of wall.
R&R are required. It will be a big job. Using treated wood is advisable but won't solve wetting issues which will lead to other problems.