5' down they are talking about is essentially from the top of the wall. It's a judgement call whether to excavate another 2.5-3 ft. deeper to be sure the entire wall is state of the art. I certainly wouldn't compact the new fill. If the weepers--assuming there are any--are working, you want the water to go down to them and drain away. I believe clay weepers were still in use in '69, in which case you can be all but sure they're not functional. And, to confuse matters more, if you have free-flowing material at that level, weepers may not be necessary at all! (Only so much one can suggest at this distance.) The house isn't endangered by the excavating--unless it's being done by a careless machine operator. By hand is always best! I've used Permaquik crystalline waterproofing in both exterior and interior applications. Sometimes as the primary waterproofing, other times as a secondary in addition to the bubble membrane. ******* Did your structural engineer determine what caused the crack along that section of foundation? Water leaks leading to frost-push damage? ******** How bubble membrane works in conjunction with weeping tiles to keep the foundation wall dry This post was edited by worthy on Thu, Mar 21, 13 at 20:06

Without any effort to dry things out, I'd be very worried about mold development. You'll also have to consider damage to mechanicals as well, assuming the previous owner didn't rip out the furnace and water heater.

Concrete basement floors are not structural, so cracking is only a cosmetic concern. Labour is the biggest cost component and that is strictly local.

We would call that the "stool" or interior sill. You need, prior to fixing that damage, figure out how the water was getting in.