This case is rheumatoid arthritis. Rheumatoid arthritis is a multisystem disease in which joint symptoms are usually prominent. Usually small joints of hands and feet are affected and are evident by swelling and redness and pain on arising and after inactivity. Osteoarthritis typically involves weight bearing joints and is usually limited to a few joints and the primary type occurs more often in men and usually has no redness or tenderness. Yes, this patient is likely to have rheumatoid factor.
New bone produced beneath the periosteum is the involucrum.
The necrotic bone embedded in pus is the sequestrum. The x-ray changes indicate the process has been present for some time. There are lots of plasma cells as well as acute inflammation. In a healing fracture necrotic bone would be present but would not be surrounded by the acute inflammatory exudate. Polymicrobial infections are likely to occur in post traumatic osteomyelitis or in elderly patients with peripheral vascular disease.