I don't have much to offer here....but I've used a small chisel to remove the lead from that type of joint. It probably has oakum (rope looking stuff) packed under it which can be dug out if necessary. As for the liner...someone else can give a better answer...but you do want to seal up the the wall a little way. My first stupid tile job was a shower I built for myself and I thought I'd not have a problem since I had a concrete slab. It didn't take but a couple of days of use before I had water in the next room! I had to tear out the bottom of the shower and install a liner and completely re-do the tile floor and about 8" of the wall.... definitely an educational experience. I'm not familiar with Kerdi but need to study it. I do know there is someting called Blue Seal which is supposed to be the cat's meow and is like a liner or sealer you can paint or roll on.