Help! I turned on my faucet in my back yard and water was on the floor inside!

So I turned on the faucet outside and I saw water pouring out of the siding by the faucet I turned off the water but when I came in the carpet by the door was wet (this is a walk out basement) so I noticed over the next couple of days the drywall stated looking "bubbled" then about a week later there was a hole in the drywall! So I don't know what I can do to try to fix this. Is it possible that the pipes for the faucet could be behind the wall to repair or is this something that the floor or ceiling is going to need to be ripped up- because I definitely will need to call a plumber or contractor or both. Any suggestions? Also we've had a lot of rain this Spring and 2 years ago in the fall (when I moved in) I shut off the water valve for the winter and this is the first time turning the water valve back on and using the faucet in the back yard.

I started researching a bit before posting this and began to start cutting the drywall to take a look behind it, and this is now what it looks like- Clearly it appears that the problem was perhaps covered up before I moved in!

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