Thanks for your input!
I ripped down some of the sheetrock (behind the tub spout) and saw there was some minor mold growth so I sprayed some concrobium. Then i sprayed some diluted bleach on it for good measure. Also i found a dead mouse on the 2 by 4, it was dried out so not sure if that was contributing to the smell.
The water is definitely coming from the tub spout. I turned it on and it's basically spraying water all along the ridge of the bath tub ( the caulked area between the tile and bath tub). As such, I am going to replace the tub spout and recaulk along the ridge.
I had three questions though..
1. i am assuming there is mold on the sheetrock (its not cement board) behind the tiles. Should i remove the tiles and sheet rock?
2. the bottom plate is dry rotted. I am assuming that is going to need to be replaced?
3. some of the piping behind the tub spout (in the wall) is literally touching the studs which is causing very minor mold growth. What should i do about this?
Thanks everyone in advance.