You could re-use the wood to save money, but at this point, I'd replace it with a new chunk of outdoor rated plywood (doesn't have to be marine grade). Sealers likely won't stick well where the WD-40 has soaked in either.
Make all your cuts in the new plywood, and drill all your holes, then seal it as recommended previously (especially raw edges).
- Varnish or paint will work, but will eventually break down and allow moisture/humidity in - won't last long and not recommended for a long-term fix.
- Fiberglass resin (polyester or vinylester) will work better, is easier to come by, and cheaper than epoxy. But won't last forever and should be applied over a layer of fiberglass cloth to really seal the wood and provide additional strength to the plywood.
- Epoxy is the best for longevity and bondability to plywood. It is a bit more expensive than polyester resin, but it also adds strength to the wood. If applied over a layer of cloth, it will be virtually bulletproof and will likely outlast the boat.
If you decide to add a layer of fiberglass cloth, be sure to radius the edges of the wood where the cloth needs to wrap around. Cloth doesn't bend around a square edge, so there will be voids in the laminate.