If it's a gas WH, reach under the tank where the burner is and feel for rust and moisture.

My wife and I have bought wheat in bags, transferred to large white buckets and added a packet that keeps the moisture out.There are also food storage stores where you can buy all your staples packaged and ready to go.

Now that the source of moisture is gone it should stop growing although some of the drywall still seemed moist.

Also, I personally wouldn't use MDF wainscoting, as if there is any penetration, it will swell and be quite noticable, where pine (or other real wood) wouldn't be as noticable if there was damage.Jay

It didn't smell down there at all like it would if it has a moisture problem.

This is one of those things where a primary insurer will deny (mold and water with no perceivable damage penetrations on the exterior are typically not covered losses) and people will follow up by filing a claim on whoever looks like the biggest name.

I would fix whatever leak is causing the moisture issue (necessary for mold) and then spray the inside of the cabinets with Jomax.

With those conditions, you are going to end up with moisture just about everywhere.

Also, I guess the main risk of having this condition is moisture intrusion?

Good point Mitch, IMO, all bathrooms should have a fartfan, opening a window in the summer heat or cold winter is not too energy efficient to let out moisture or odors.