As long as the area does not get too large, ream out the offending holes until you hit dry wood. Shape the bores of the holes so that the middle diameter is larger in diameter than the entrance/exit (sort of a reverse hourglass.)
Fill the offending holes with epoxy or other similar material (there are a lot of them out there, as websearch for transom repair should get you a bunch); allow to cure, redrill (one good thing is that you won't have to reseal the holes after drilling,
) Oh, and you said you removed teh engine bolts; make sure you seal those up again, as well.
Luck, congratulations, and don't feel too bad; a couple I know just had their new-to-them Avon go into the shop for a complete transom rebuild (to the tune of about $5K. Same cause: water ingress.)