Mike,
Don't know how bad it is/was but from your description it sounds like there was some dry rot going on. When I was doing my oar I came across a site that talked about stopping dry rot and how to repair it. One thing they mentioned that stopped me dead for a second is that once dry rot is started you can't just stop it without radical surgery, removing the entire area that is affected. The reason is because the dry rot isn't caused by wood just deteriorating but according to the article a living organism that eats the wood and goes beyond the area that is noticably affected. The article did state that there is only one way to stop dry rot (I'd have to temper this by saying, that the author knew of). He used ethelene glycol (antifreeze) to stop the rot. He said that this will kill the dry rot organism and after it dries can be painted and/or epoxied.

Google for "dry rot" repair "ethelene glycol" and you'll probably find the article.