If wallpaper was painted over you could tell pretty easily by pulling on some of the peeling paint and breaking the paint chips. Wear a respirator mask while doing this, however, as often times flaking paint is a potential indicator of lead based paint. If the chips contain paper, then you're right, it's wallpaper with paint over it. If it's just paint, then be more careful - get the chips tested for lead.
Given the wide spread flaking, it is likely that the wall simply wasn't properly primed. An improperly treated wall when painted over will eventually lose adhesion with the paint and it'll flake away like you're seeing. If they applied paint directly to wall paper w/o priming, I think the same is true.
That 2nd picture DOES remind me of wallpaper... I've scrubbed far too much backing off the walls and that looks similar.
The grey subsurface is, I think, a kind of stucco mix that was often used to even up walls where lathe and plaster was replaced with the older style 2x4 drywall panels. It's nasty, gritty, dusty, unpleasant stuff, tougher than joint compound/plaster to work with because of it's tendency to crack and break rather catastrophically. When I run into that stuff in my rentals my approach is, "IF I have to touch it at all, it's ALL coming down." Plus with wallpaper I swear gutting is easier than stripping.
Now around the vent pipe, that looks like moisture damage. The bubbling around the pipe suggest water leakage. Is that a "finished" ceiling - ie - thats the roof on the other side of that wall w/ the pipe? If so, make sure it's properly sealed and replace at least that area of ceiling.
Picture #5 seems to confirm this - someone touched it, and patched it badly.
I think you need to get a structural engineer out there ASAP to investigate; I would be worried too!
Your city's by-law office might be able to refer you to someone who can help.
It might also be worth getting in contact with your insurance company - they might have their own engineer come out.
If you think it's really about to fall over you might opt to call the gas company to come shutoff the gas - the last thing you need is a fire added to this.
You need to make a judgment call on whether to stay in the house while you determine what's going on. Being dislocated at a hotel is not fun, but if your life is in danger, its a small price to pay. If you do leave, turn off the water and electricity too.
Good luck!
Best Answer
My guess about these planks are that a builder made outer walls (that are carrying the loads) first, as well as interior support walls (if any present) and then laid a wooden floor. Just then, he(she?) managed to place internal walls that were not for supportive matters (dividing into rooms) on this floor. Years passed, loads made under-wall-planks to go deeper, while floor lasted on the same level. (all that I said was assuming that builder knew better; I'm afraid that past-technologies and construction commons were less sophisticated)
No matter what was the reason, it will be nice to do something about that. Leaving this as it is may or may not cause any problems in a near future, but making a reconstruction with that good access is tempting to solve this now.
Aloysius Defenestrate put an advice in his comment about wood consolidation epoxies. It may work, though I would hesitate to use it if the plank can be accessed to water/is totally rotten. Still, given a proper support from epoxy producer, it can be worthwhile.
Another way of 'replacing' that plank (or what is left of it) is putting concrete instead of it. It is something done in monuments or to make a less-harming change within older buildings' structure. You can replace the plank with concrete partially, say - by 20cm of plank per 1m of a wall. The wall will lose some of it's support (for a short time), but I guess it will handle that at ease. After some 1-2 weeks make another 20cm replace and so on. It's best if done by a specialist and I would advise consulting these distances (20cm replace per 1m of a wall), but I think that it will make this repair more solid.