Looking for some budget friendly options to fix the siding of our detached garage. I was thinking to add vinyl siding but wasn't sure if I would have to patch up the uneven middle area or put the siding right over it. Any recommendations would be great! (see attached pic)

Hi everyone! I need all the advice I could get. I am planning on converting my detached two car garage into a soundproof music room/karaoke/entertainment room and I have tons of questions and planning. I plan on make a room within a room. But to first do that, I need to remove the garage door and close up the hole. That's the first phase of the entire project. I am not a builder and it's going to be a DIY project so please excuse my ignorance and sorry about the dumb questions. I figured it will be a great learning experience for me. In my head, my plan is to frame up the hole with studs then put sheathing, then put some sort of siding. I'm thinking of putting pressurized 2x4 for the bottom plate on top of the concrete floor. Once I put the frame/studs and sheathings up, do I need to put some sort of flashing at the bottom where the wall meets the ground? The garage is level to the ground on a concrete slab foundation... so how do I go about doing that? Should I put space between the sheathing and the ground? I heard that the sheathing should not touch the ground. How do I then seal the gap between the concrete and the sheathing? I wanna make sure the water doesn't get in when it rains hard and water pools close to the wall. Since this is my first time doing this, do you have some tips and common mistakes? Also, as I am looking at the rest of my garage, which does not have any drywall in the inside, it seems like the wall is made up of stucco but I don't see any sheathing behind it, just some sort of paper backing and I see some cement type stuff chipping from the inside which is weird. Is it common that some structures have no sheathing? I live in Southern California if that makes any difference in terms of climate. Thank you so much!!!