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You can pour some vinegar on it and see if there is a good reaction, but from your description and the age of the house, it is almost certainly lime mortar. The exterior may have already been repaired with portland cement, which would help explain why it has deteriorated on the inside. If so, you may as well replace it all with portland mortar, but doing small areas at a time.
Type S is fine, but Type N would be even better.
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