crumbling drywall
You cannot repair water damaged drywall. You will need to remove the baseboard, cut out all that is damaged and fit, tape and mud new drywall the same thickness. Then seal/prime and paint. Replace the baseboard.
This is not as ominous a job as it might sound.
Did you source what caused the damage? Be careful when you cut the drywall out you do not hit electrical or plumbing runs.
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