From my report: If you replace your old furnace, your chimney may require modifications to assure that it is sized to fit your new heating system. If your chimney is too large for your new system, it may not remove combustion gases properly from your home, possibly leading to backdrafting and allowing combustion gases such as carbon monoxide to enter your home. Your old chimney may also be prone to moisture accumulation and deterioration. Mid-efficiency furnaces (80% plus) produce a smaller volume of combustion gases than traditional furnaces, and those gases are slightly cooler and therefore condense in the chimney instead of leaving in a vapor condition. If this type of system is vented into an older, un-lined chimney, it could result in chimney deterioration or back-drafting. The best approach is to reline the existing chimney with a smaller, corrosion-resistant metal liner. Re-lining the chimney can be expensive, but neglecting your chimney when you install a new furnace can lead to a crumbling or rusting chimney in a few years. If you plan to install a new furnace, be sure to ask your serviceman about proper chimney sizing to protect your home and your health. Call a licensed HVAC contractor for further evaluation. When ever I go into an older home and see un-lined chimney with a newer furnace which includes a draft inducer I always write this up. Your picture is a good example of what happens when they forget to install a chimney liner. Keep an eye out ofr orphaned hot water tanks too. We discussed this a few weeks back.