installing bookshelf pot rack in drywall

Hey everyone. I bought a foreclosed 2 year old brick home in Madison Ms. The home has been vacant for 6 months My inspector informed me of a step flashing that needed repair, and I just got it repaired before moving in. We knew of some slight staining on the baseboard at the top and bottom of the wall, and thought we could paint with kilz and repair and sheetrock with mud. I have noticed if I smell under the baseboard on the wall where the flashing leaked I can smell a musty smell. Is this something I sholud worry about? Also i can smell the musty smell on the joining wall that has a large window on the outside wall of the home. Im hoping since the leak has been replaced there will be no other major repairs needed to be done. Any recomendations or help with this will be greatly appreciated.

I am about to have my bedroom walls sprayed with a knoc-down finish to cover some bad places on the walls. The ceiling is now the 'popcorn' ceiling & the popcorn finish is in good shape, except that I hate popcorn ceilings. If I scrap the popcorn finish off while we remodeling, what kind of finish would look okay with knock-down walls? Do you do the ceiling in knock-down also? Any suggestions appreciated.