Designing Kitchens and Bathrooms - moldy sheetrock in bathroom

i recently moved into this old house built in the 1890's. the previous owner tried to remodel the bathroom and only the bathroom over the years, but anyhow i removed some sheetrock from the back of the shower and it is very moldy and rotten looking. my question is why would this happen; besides the obvious it got wet...lol. what are you supposed to use for rock around the tub? what i am thinking is it is alright to use regular rock as long as you caulk and seal everything good, which by the way it looks they did not. thanks for any help.
thanks ben

I believe Greenboard is the choice (and code) for tub surrounds.

thanks majakdragon

Greenboard isn't used much today. It is better to use wonder board for a tiled tub surround. For the painted areas of the bathroom reglular rock will work just fine provided it is well painted.

You don't want sheetrock in the shower area [excluding ceiling]. If you have sheetrock it should be covered with a vinyl tub surround. Before cement board the only 2 choices for tile were a masonary scratch coat and greenboard. Wonder board is easier and preforms better than greenboard.

marksr,
Thanks for the update. Old plumber hasn't done much remodeling lately.

Vapor retarder over insulation in walls and then concrete underlayment board (marketed under different brands) works best in shower surround. Greenboard is water resistant drywall but it is not waterproof.