My plan currently includes:
1) Replace 4 standard 15 amp breakers with 2 tandem breakers. The panel allows this, but not sure if code requires AFCI). Fill void with 20 amp 2 pole breaker.
2) Use existing (but disconnected) 4 wire 6 gauge running through 1.25" conduit in the crawlspace to route a multi wire circuit to GFCI protected disconnect box located outside the house.
3) Connect 12/3 underground cable to the disconnect box, conceal it in conduit to get it underground, route it to the out building and up through the sill plate to a double pole disconnect switch in the shed from which I will distribute it to receptacles and a wall heater

I would love feedback or suggestions.

Thanks,

CDC

Given one multi wire circuit here you can get away with what you are doing without installing a grounding system at the outbuilding.

Are we talking about one of those spa packs? (GFCI disconnect things). Why bother? You could just put a GFCI breaker in the panel or a GFCI receptacle in the outbuilding.

Your right, the existing wire was (I assume) connected to a hot tub. The spa is gone but all the wiring and the disconnect box stayed. They only reason I'd use it is because it's already here.

A couple potential problems I forgot in my earlier post:
The existing wires are all black with tape to color code the ends. I'm not sure if that is still allowed. And the conduit is just sitting on the ground of the crawl space, not secured to the walls or joists. It's less then a crawl space, more of a belly slide space, but I think they may make me do something there.

Please post any other advice you may, otherwise I'll update after the first inspection.