Australian Standard 1684 Part 2, Residential timber-framed construction, contains the following requirement: Boards over 85mm cover width shall be fixed with a minimum of two face nails at each joist....nails shall be skewed slightly to the vertical in opposing directions....the mechanical fixing shall be supplemented by a minimum 6mm bead of polyurethane or polymer flooring adhesive to the top surface of the joist (Clause 5.5.2.2).

From your photo it looks as if the cladding has shrunk and split off part of the lap. Glue won't stop timber from moving in response to moisture changes. It just allows stress to build up in the timber until it's relieved by a split or by the joint opening up. So the short answer is that the timber has to be allowed to move. As long as the timber isn't restrained, a lapped joint permits movement without detracting from overall appearance, unlike other joints where gaps caused by movement are more obvious. We assume the cladding isn't fixed to the steel.

Unfortunately we have no statistics on the percentage of recycled timber used in new construction. There are one or two technical difficulties. For example, recycled timber often contains contaminants such as nails, grit and so on which can damage equipment, it is not graded to current standards, and obtaining large volumes of the same size members is not easy. Nevertheless, companies that recycle timber do a brisk trade and it is particularly useful in restoration work. You may wish to contact recycling yards to see if they can advise you on their main markets. 

In answer to your questions (1) the wall framing is pine and the floor joists also appear to be pine, although less clear in the photos; (2) it's not possible to tell if any of the mould was pre-existing, but in our opinion there is a high probability it appeared while the timber was damp for 1-2 months; (3) surface mould does not necessarily indicate decay or any loss of strength in the timber, but our Technical Design Guide #12 titled Impact and Assessment of Moisture-affected, Timber-framed Construction provides guidance on assessing

NCC vol 1 Clause F3D5 only allows the following external wall materials as Deemed-to-Satisfy:

(a) Masonry, including masonry veneer, unreinforced and reinforced masonry: AS 3700.

(b) Autoclaved aerated concrete: AS 5146.3.

(c) Metal wall cladding: AS 1562.1.

H2 treatment is purely to provide protection against insect attack (borers and termites) and does not have any anti-fungal properties. While it is anticipated that timber framing is likely to have short term weather exposure during construction, H2 treated timber, also known as 'Blue Pine', is not suitable for long term exposure. We suggest you contact the timber supplier, since the critical question is whether your warranty (usually 25 years) has been affected by the heavy rain during and after cyclone Alfred.

The rubberwood tree is the tree which produces the latex from which rubber is made. The trees are grown in plantations in countries such as Malaysia. When the trees stop producing latex they are removed and milled into wood products for furniture and joinery. It has also been used in Malaysia for making MDF. If your windows will be exposed to the weather, rubberwood would not be suitable unless it has had a permanent treatment against fungal attack (wood rot). The reference book 100 Malaysian Timbers rates it "non-durable".