You removed the 1 way check valve, likely part of the pump, when you cut the line to the pump.
Your sump being low, already had a syphon ready to go, it just needed one last push to get started.
The pump of one of your neighbors started and everything in the pipes of all 4 pipes came flowing into your sump.
Your son witnessed an excellent lesson in gravity and syphons. Far more impressive than anything he will be shown even in college physics.
If this wall is parallel to the trusses, it is probably not load bearing. At least that would be typical.
Water infiltration
You must address the cause of the water infiltration, or this will only happen again.
You noted the lack of housewrap, and that may be contributing, but since its by the window I'd say correct window flashing is essential. Check with the window manufacturer for instructions (they are all similar but for example: Andersen). The details really count, especially how to lap one layer over another, etc.
If you can do it from the exterior, I'd also air-seal the window to the framing while you have the chance. (e.g., Canned spray foam - low expansion).
You should add housewrap (or tar paper) wherever sheathing is exposed, and if you ever re-side tie into that later.
Framing
This is a reasonable repair to do yourself. It sounds like the rotted studs are possibly still adequate. i.e., if they are solid the remaining thickness and no water has reached the interior, you might be able to just live with them as long as the wall is closed up correctly.
You could also sister new wood side-by-side with the existing which would avoid tearing out material and damaging the interior finish. The key thing is that the header is still supported by the left stud. If you sister the king stud there you might run some long structural screws (like Headloks) just to ensure the new wood will support the header.
The thing that concerns me most if you want to leave the damaged wood in place is the sill plate. If that is rotted through it isn't doing its job (transferring the load of the wall, ensuring shear transfer through the sheathing, etc.) However you could probably just cut out that rotten piece and slip a new one in. This is unlikely to damage the interior since it is probably behind trimwork. You could also leave the rotted section if its small enough, and slip in 2 or more 2x4s on the horizontal over the top of it. This might spread out the load adequately.
Best Answer
How awful. The studs and plastic were a terrible mistake. I think you are absolutely on the right track to replace everything with materials that are not degraded by water. Basements gonna flood.
Re-doing any basement wall that's made of concrete is easy in principle. Cover any such wall with 3-4" of foam insulation board (EPS, XPS, or polyiso), and seal and tape the edges. You can cut channels for electrical boxes (use metal ones). Cover it all up with cementboard (not any flavor of drywall) and then put on a skim coat of lime plaster, perhaps gauged with a small amount of gypsum to make it harden faster (advanced technique, practice it first). This is a wall that laughs at water.
Looks like you have a walkout basement. That means you have one or more stud walls. If none of the walls have wood at the floor, then you're good with the above advice, and you can cover up what studs remain with drywall or whatever, but do take the opportunity to remove the plastic vapor barrier in any stud walls (ugh, why are people so obsessed with vapor barriers?). You neither need nor want a vapor barrier in your wall unless you are north of Illinois, or especially in any climate where you'll be using air conditioning. In mixed climates, they cause more problems than they solve.
If you have any stud walls that go to the ground, it's more complicated. There is no removing all the wood from these walls unless you are willing to remove said walls and rebuild them out of concrete blocks. If the wood in these walls gets wet and stays wet, it will rot. There is no practical way to prevent un-treated wood from rotting in the presence of standing water. If it's just one wall, you could hire someone to rebuild the bottom few feet out of concrete blocks and then follow the above advice.