Insulation inside AC unit has mold and falling apart
I've done similar repairs to AC units. The yellow insulation can easily be replaced with fiberglass insulation from your home store. It can be cut to fit and just set in place.

I would not be replacing the insulation inside the plenum as you would weaken the structure. I'd spray some white vinegar in it and let it dry. Vinegar is great for killing mold, surface and below the surface. Then lightly vacuum it out but don't break up the insulation. Make cleaning the drain a yearly task and don't wait for it to leak first. Many AC units have a safety float in the drain piping that will shut the unit down if water fills the pipe.