You rip it all out. Redo with tile backer/ cement board and use red guard or equivalent.

Bathroom renos are expensive for a reason. It costs money to do it right but right is the only way around a tub. Same with your shower controls. Do not cheap out. Most plumbers I know will refuse to do tub/ shower controls unless they are Moen. Not to say others aren't good but Moen is the least problematic if issues arise down the road.

Then there is the framing. Ripping it back to studs allows you to shim any wonky studs to make your backer nice and even which in turn will make your tile job easier and nicer. Don't do half a job or you will be sorry