No Load Bearing Walls & Home was Drywalled Prior to Walls Constructed

I've taken on a large project on a 700 sqft home. I'm gutting it down to the studs because of mold issues and I continue to find unusual things.

It is basically a three room house. Each room has had two layers of drywall on walls and ceilings. The home was empty of interior walls and then the four walls and ceiling was drywalled, painted and even wallpapered at some point. At some later time walls were constructed over the drywall. Now that I've removed all the drywall the walls are basically attached to the floor with the space of the drywall on the sides and on the top (along with left over nails). Neither of these two walls are load bearing, clearly.

My question….Does a 700 sqft house not need load bearing walls because of how small it is? And how do I correct the issue where the drywall used to be on the side/top of the stud walls?

The age of the house is a bit of a mystery. I found one place that said 1908 but I'm not certain that is accurate. If I had to guess I'd say 1930's???