Is it possible to cut out portions of the rotten 8x8 and replace it with good timber and then join all the pieces with lets say a 2x8 to tie them together?

You lose the strength of 8 x 8 in all directions. I'd rent lally columns and replace it with a new 8 x 8 sill or one made of 2 x 8's bolted together. It all depends on what it's holding up!

If I were to join all the sections both on the inside and outside full length, would that help. I am afrai if I try and put one long piece in that I will disturb some of the stone wall.

You still haven't said what the sill is under! One story, two story house? How long is the sill? Are there beams and posts along that distance?
How would sistering 2 x 8's OUTSIDE hold up what's above it?
Sistering gets done all the time around joists, but not sills.

We have no idea how rotten it is and how much load from above. 'Disturbing the wall' sounds ominous too, if a wall is that easily disturbed.
Get a contractor out there to give an estimate and ask him questions, or start giving people here a lot more details.
I'm not even one of the real builders here.