In a combined experimental and theoretical study we have investigated the ionization of atomic argon upon irradiation with intense soft-x-ray pulses of 105 eV photon energy from the free-electron laser FLASH. The measured ion yields show charge states up to Ar$^{7+}$. The comparison with the theoretical study of the underlying photoionization dynamics highlights the importance of excited states in general and of processes governed by electron correlation in particular, namely, ionization with excitation and shake-off, processes usually inaccessible by measurements of ionic yields only. The Ar$^{7+}$ yield shows a clear deviation from the predictions of the commonly used model of sequential ionization via single-electron processes and the observed signal can only be explained by taking into account the full multiplet structure of the involved configurations and by inclusion of two-electron processes. The competing process of two-photon ionization from the ground state of Ar$^{6+}$ is calculated to be orders of magnitude smaller.