I helped the rebels in my last playthrough and couldn't help but notice that Windhelm is basically a ruin ... with people living in it. I mean Whiteruns walls were in terrrible shape, but most of the city looked fine, but Windhelm was just a dump from one end to another. Is there a reason for it.

Its an old city

i think i read an in-game book that said it was from 1E or 2E

ahh, here you go

http://www.uesp.net/wiki/Lore:Windhelm

Because it's full of scumbags. That's why you need to go imperial and kill then all!