I have started doing a renovation on our master bathroom. After the demolition, I noticed that the exterior wall had what appeared to be drywall as the sheathing. Problem is that the drywall did not go all the way to the top of the interior wall, so the top of the wall was open to the outside air. Looks like we also obviosly had some rodent or larger, probably a raccoon or a opposum trying to eat its way into our house.

I would like to seal the exterior wall all the way to the top of the interior wall and add insulation to this area as well. The space between the stone facade and the sheathing appears to be filled with blown in insulation. How should I go about adding the additional drywall material to seal off air penetration into the bathroom? I should be able to get some access through the soffit but not sure how much.
We live in west central Georgia, and I have never been able to get a good handle on whether to have a vapor barrior or not, or for that matter where it should go. I would like to add insulation between the exterior drywall and interior drywall, but do I need to add a vapor barrier as well?
Would that be creating 2 vapor barriers (exterior drywall and kraft faced insulation)?
Any help you can give would be greatly appreciated.