Replace what is structurally unsound and have the outside soil treated.

Yikes! Call the pest control agency first to be sure that the damage is localized to just that area. Then, OF COURSE, you want to replace the material that is no longer structurally sound. If you are in doubt about if it is or isn't, lumber and sweat is cheap peace of mind.

yeah i think it is structually sound as nothing is load bearing, but i think that replacement is probably the best option even though it isnt the easiest.

Thanks.