Almost all boards are kiln dried now adays, so that isn't the problem. As has been mentioned it is dry rot. Logs can be missed or forgotten by the loggers when they load up to take them to the mill. So instead of writing off the log, they will slip it in with the next years harvest after it has been laying on the ground for a year. That board is worthless, but don't give up on red oak in general. Just get rid of that piece. Josh