Does the thickness of insulation on the cooling pipe of an air contioner make a difference to preventing mould and condensation
Yes, if it wasn't insulating nor tight to the pipe &amp; therefore trapping &amp; holding the condensation water. You basically had a very thick &amp; long wet sock in the room that never dried.

Now that the correct insulation material &amp; method has been employed. Completely spray &amp; let soak for a few minutes &amp; then sponge wash the moldy areas with a solution of 1-part Bleach to 3-parts water. Re-painting may be needed if the walls are on the darker side.