Again, this is one of those post where pictures would certainly help. I have replaced many sills in my area but none that sound like that one. My two cents based on your info: I would look into getting the floor of the affected area of the house as level as I could by putting 4 x 4's under the existing floor joist, perpendicular to the run of the joist. Using a hydraulic jack, or more would be better, jack up the floor slowly in different areas, add bracing underneath the jacked up area, right next to the jack, with good footings until you have the floor level. Then decide how much sill you will need to put in, don't be surprised if your new sill is tapered due to your current footings having settled. I would use two pieces of 2 x something as sill, stacking them together to get the required thickness and standing them up vertically, I always bolt mine together using lag screws on 24" centers. I try to work in sections when working under a house, no longer than 10 ft., this just makes them easier to handle. If I use more than one section, I overlap each section and bolt together. I do not use pressure treated lumber, a sill should not be getting wet, and PT in this area shrinks really bad as time passes. AND it sounds as if you need a vapor barrier on top of the concrete block, sheet metal to me is the only way, aluminum roof flashing works well, let it hang over the sides of the block at least two inches or so. I have never seen a sill bolted down in this area, weight holds them down. I have no knowledge of any type of foam to use on top of the block, doesn't sound good to me. A picture would help understand the notching of the 2 x 8 joist to fit into what slot? Good Luck , David