Earlier today, I was investigating a crack in a CMU basement wall from approx 1920 or so.  The wall is retaining and has been in direct contact with soil for its life.  There was no appearance of waterproofing, but no real way to tell.  I looked hard at the CMU because it just looked weird, then took my awl and poked it.  The CMU was complete mush.  Turns out I was able to pry off the entire face on one block, and the entire back wall and retaining part of the side wall is soft like that.  The poor realtor looked shocked as I just started laughing - CMU isn't supposed to do that!

So, to the question.  Is there any possible way to repair mushy CMU?  The current plan is to recommend replacement of the two damaged walls, including appropriate waterproofing details.  This is a residential garage with a small apartment above it, in a posh part of town, so repair is worth it.  I thought about recommending that a new wall be built just inside the existing walls, with separation to keep from deterioration, and to take the load from the small apartment above, but that would remove a lot of the interior space.  Any thoughts?

I've attached a picture of my awl, deep in the CMU...