I have a 36 inch by 36 inch shower pan to install. The partical board under the old shower looks pretty bad. There was a lot of water damage to the whole tbathroom. After installing a new exhaust fan I am confident that will help greatly. I am going to tile the walls of the shower. Now my question is. I understand I need to have a moisture barrier behind the cement board. I also understand you have to lay down mortar under the pan before installing.
Do you have to lay down plastic on the wood before putting in the mortar? Since the wood is bad can I just put a 1/4 piece on top of the existing wood or do I have to cut it all out and replace it?

We usually use 10lb or 20lb tar paper as an underlayment - but any thickness will do. Basically, all it does it prevents moisture from mortar to soak into sub floor.

If your sub floor is in bad shape, you should replace it.