The restoration thread in my signature line has pictures and text of how I recovered from multiple leaks.
The Cowboy/HiltonBriefly: tear down frame to solid wood, remove insulation and wiring. Replace rotted frame and install wiring. I used 1/2" of fiberglass batt insulation against the aluminum siding followed by a 1" extruded foam board. This allows for wiring and a place for moisture to exit the wall cavity. Each piece of foam board was friction fit in the wall/ceiling cavity and some were touched up with foam-in-a-can. Yes, you will need to allow for ventilation between ceiling rafters.
I also installed a vapor barrier and a 1/4" fan-fold insulation board beneath the wall paneling. The result is a trailer that is easy to cool and heat, and also very quiet.
Since I replaced all of the interior paneling, I had a choice of materials. I used 1/4" (nominal) Luan board, sealed both sides with gym floor sealer.
I'd suggest to stock up on construction adhesive (Liquid Nails) and use liberally between joints in frame.
Good luck with the restoration. Done right, you will end up with a better trailer.
