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1. If the dried apples are moist and flexible, place them in a bowl, pour in enough boiling water to cover them and let the apples soak for about 30 minutes.
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2. If the dried apples are stiff and brittle, cover them with cold water, set the bowl in the refrigerator and let the apples soak overnight. In either case, drain the apples in a sieve, discarding the water, and pat them completely dry with paper towels.
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3. Preheat the oven to 350°. In a heavy 10- to 12-inch skillet, melt the butter over moderate heat. When the foam begins to subside, add the apples and squash and, stirring frequently, cook for about 5 minutes, until they are delicately browned. Stir in the basil and salt and then, with a slotted spoon, transfer the apples and squash toa deep 1-quart baking dish.
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4. Add the vinegar and sugar to the butter remaining in the skillet and stir over high heat for 3 or 4 minutes. When the mixture thickens slightly, pour it into the baking dish and toss the pieces of squash and apple about with a spoon until they are lightly and evenly coated.
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5. Bake in the middle of the oven for 20 to 25 minutes, or until the squash is tender and shows no resistance when pierced with the point of a small sharp knife. Serve at once, directly from the baking dish.
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