Will a capsule of pau d'arco save my arbortivitae from root rot?

You need to address the drainage issue. If the standing water keeps happening, nothing you can really do to prevent the damage.

Pau d'arco will not keep the roots from drowning, nor prevent pathogens that oftern accompany root rot.

Bank up soil won't help, because the it won't stop the "wet feet" issue. (and can make things worse for the plant if the trunk is cover, and too much soil sits on top of the surface roots).

Calcium also will not stop rot where there is poor drainage.

In short, poor drainage is your problem, and fixing that is your solution. Whether that's possible depends on your soils, subsoils, the slope of the land, and where you might redirect the water.

If it's not possible, you may have to consider replacing the arbs with something that doesn't mind "wet feet".

I have a standing water issue -- it is really in the neighbor's yard but it is affecting my beautiful 12 foot high arborvitae hedge! 3 of my arborvitae died and it seems like they just plain rotted. If I open a pau d'arco pill and put it at the base of each bush will it help protect the bush from root rot? Can I bank up soil around the bush to protect it from water or will that just smother each bush? What about working calcium into the soil to halt rot? Any other ideas for alternative tree care?