I suggest you read the tech resources at www.buildingscience.com concerning current current good practice in basement insulation and finishing. Two basic rules that I have gleaned are no visqueen and no fiberglass insulation. Reasoning is water vapor will enter the wall assembly from the foundation (worst-case thinking) and the only way out is into the iving space; its OK for the vapor phase to do this, we're not talking liquid water here. The reasoning on fiberglass is that it can act like a sponge and hold liquid water in the wall assembly. Foam insulation is what is recommended (white bead board or styrofoam-type). It's a bummer that the GC didn't waterproof the exterior walls. Look at the above resources, I believe that glueing styrofoam directly to the concrete walls has been used to 'seal' the walls and direct any liquid downward to be handled by an alternate drain. Good luck.

Everything always has a bit of natural "drying" ability. Spill a little water on your floor and it'll evaporate. Set up a slow drip and if the rate of accumulation outpaces the rate of evaporation you'll end up with water damage. Same with moisture in house walls. Moisture vapor can be driven into wall assemblies, mostly via air movement. Some insulations are better at restricting air movement than others. Foam and dense-packed cellulose are great air infiltration barriers, fiberglass is not so good. When moisture vapor does get into walls, some wall assemblies can "hold" the moisture better than others. Cellulose can hold moisture fairly well, fiberglass insulation not so well. Same with liquid moisture. Liquid moisture can get into walls via a leak in the plumbing, cracked grout, a roof leak, etc. When moisture gets into an assembly, it needs a way to escape. It usually escapes via the same path it entered. Moisture is accumulated during a wetting cycle, and given up during a drying cycle. If the wetting exceeds the drying, then over time you get water damage. Rot, mold, etc. Building science generally recognizes the idea of wetting and drying cycles. It recognizes that some materials hold moisture better than others. It recognizes that moisture may get into assemblies. Because of that, we also want to provide a back door through which it can escape in case it can't exit through the way which it entered. That's why building code prohibits two vapor barriers in a wall assembly. Moisture that gets in could be trapped between the two barriers, creating what's referred to as a "moisture sandwich." There's a way in but not enough of a way out. I certainly understand there are all sorts of "but what if..." and "but how could it..." on this subject. But that's the short long answer. The long long answer is really long...and evolving. Just like building science.

First of all you do not even say where you live, so I can properly place the vapor retarder, so I will try to help the best I can. The correct location for a vapor barrier, or more correctly, a vapor retarder, since it is very hard to actually have a real vapor barrier is on the warm side of the assembly. Vapor pressure always moves from warm to cold, because warmer air has more pressure than does cold air. Plastic on studs over unfaced fiberglass followed by MR wallboard is a good system, and provides a pretty good vapor retarder, from my experience. Much better than faced insulation, if you live in a northern climate where the vapor drive is from inside to outside. From your pictures it looks to me like you might have an actual water leak behind the plastic. If the fixture is in the wall you are showing, remove the shower head, cap it off and turn on the pressure to see if you have leaks in the connections. I would not ever use wallboard in a bath or shower area. You want to use a cementitious board like wonderboard.It looks to me like someone may have reused the insulation that you have in the wall, then installed the plastic and new wallboard without actually solving the real problem. Look at it this way, If cold air is getting into the cavity, the warm bathroom air will condense on the inside of the platic, not the outside, because the warm air contains the moisture. If the mold is not widespread, and consistent throughout the wall, but is occurring in one place it it probably a leak that has not been corrected.

Thank-you! I guess I don't know what I'm looking at. The sill is rotting but not rotted through or anything but when I look between it and the siding, I can see the ground from inside my house. It's hard to explain. Maybe I'll be able to see what's going on more clearly when I rip it out.