Liner with insulation question

Doing a little exploration for a buddy's buddy.

He has a wood stove with 6in. liner. There is insulation the length of the chimney that is NOT solid, but not loose. When the guy bought the house, an inspector said the liner was beginning to rust out and needed to be replaced. How do you replace a liner with insulation the length of the chimney?

Do you run a 5.5 or a 5 in. liner down the exsisting liner? Or, is there a way to get the liner out with the insulation? Or, must all the insulation be taken out?

Never saw any of this set up. I am going on what they are telling me.

As always, thanks.

If it is loose, you should be able to make a hole in the chimney somewhere above the tee and have it fall out. In a perfect scenario that would work. May have to make a few holes. If the liner is rusting ???? it should be able to be unraveled from the top. Just work one of the seams loose and pull, it will unravel. Like this.... View attachment 88822

So sounds like it's maybe a poured vermiculate insulation? It's not like a blanket liner that is just loose around the pipe or anything?
I wonder how the liner would/could rust out... but if it's a poured liner like vermiculite it sounds like a pain even if it could be unrolled like shown above...
If it's that kind of insulation I suppose the options would probably be either what you mentioned (running another liner inside it) or having to take all the poured loose stuff out, either one sounds tough. Only other thing I can think would be attaching a new flex liner pretty securely to the BOTTOM of the old liner pipe and fish the old stuff out the top, thereby pulling the new pipe up into the same vacancy where the old one was. That could work, maybe? Probably have to put a NEW rope down the old pipe, attach to a leader cone on the new flex, and pull that up at the same time you are pulling the old stuff out. If the old stuff is really seriously damaged, it could be hard to pull out though and cause problems for the new?

Many things can make a SS liner rust. Coal is the main culprit usually. But other chemicals in the wood, such as burning drift wood. I have heard of liners falling apart because they were near a laundry room and once in a pool house and the bleach that was in the air was sucked up the liner and over time it deteriorates.

The wording, "stainless steel", can be confusing. What it means is it will rust less than steel, it can still rust.

Yesterday i went clean a fireplace and the chimney looked a little rusty as well.