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It is a bit vague on what happened. The mechanics for the game suggest that vegepygmies make for great low-level encounters, but sheer perniciousness of russet mold means that a patch of the stuff is a death sentence for 2nd level PCs. The weakened version that Vrilledt is infested with is about right - dangerous, but not deadly.
The original batch has got to be in C1, and it grew there from a sample that got out of hand somewhere in C6-C8. Presumably it was in C1, as that's where we see some reddish patches of mold. The Brigh worshippers must have blundered into it and breathe in the spores. They die horribly over the next minute, and a day later the vegepygmies come on the scene. They take over the southwestern section of the science deck. Khonnir's team return a day later, and they recognize the danger the mold presents once Gerrol stumbles into it. Khonnir blasts it with acid over and over, destroying it, but he attracts the attention of the robots as he does. Gerrol flees and gets as far as the skulk caves. They chase him into the cavern with the brown mold, where he begins to die from having his body heat leeched from him. In an effort to stay warm, he tosses out a flask of alchemist's fire at the stuff, covering the room and himself with the fungus. He then dies.
I'm not exactly sure how something that grew in C6-C8 got out into C1, but it's the only logical place this all could have happened. Ventilation systems connecting C1 and C6, maybe?