Is this room’s HVAC tied into the main house‘s system or is it heated and cooled separately? What part of the world are you in? What’s the exterior cladding? I assume that either A. this bedroom is an addition, perhaps an enclosed porch, and that the partition wall was once the exterior wall, or B. this is a manufactured (mobile) home.

Edited to add that no, I have never seen cardboard used as a finished-wall substrate.

Forced air vents in the room so HVAC is tied in. Majority of the walls in the upstairs are similar so it’s not just the one room. I’ve never seen walls done like this either. Minnesota. Bedroom isn’t an addition and it’s not a mobile home as it’s about 2000 sq ft with full finished basement (done properly with sheetrock everywhere.)

Looks kind of like "Beaverboard" (yes it's a real thing), but I'm not aware of it being used in the 70s. Could be Homasote that was being used as a tackable surface.

How thick is the fiberboard?

If you leave it and drywall over it, remember that you will almost surely need to add jamb extensions around door/ window opening. OTOH, the fiberboard adds some insulation value as well as sound deadening. But from the picture, since some of it has been stripped away, doesn't seem practical to save part of it & have to deal w/ the irregularity from where it has been removed. I would take it back to bare studs. Easier to make any electrical changes w/ all the sheathing gone, too, if you anticipate doing that.