repairing concrete wall? and stripping wallpaper from raw drywall

hi again guys. we took possession of our new house and immediately went in to start priming. one room in the basement has a cold storage of sorts, and that half of the room was covered in wood panelling, the previous owner was using it as a bar area. I specifically asked him what was under the panelling, he told me drywall. So we thought this would be easy, rip off the panelling, patch up the drywall, prime and paint and it's done. We ran into a few problems.
the 2 walls adjoining the cold storage are concrete, and the previous owners have wallpapered right over it. the place has all new windows but at some point their old windows were apparently letting in moisture, so the concrete closest to the window is crumbly. there's a hole cut out by the floor to allow access to a drain in the cold storage since there's a water softener in there, but the hole was covered by the wood panelling anyway. the back wall and half of the right-hand wall are wallpapered right onto raw drywall. =_=

so I'm not sure how to strip the wallpaper from either the concrete or the drywall without doing damage, and not sure where to go after that. we're thinking we can either:
-plaster over the concrete to get a smooth paintable finish, or
-put up some strapping and then drywall overtop of it. the problem with this is there's a doorframe on one part of the wall, and the corner where it joins with the finished part of the room has a window. the windowframe goes right up to the corner, and we actually tore a bit of the trim around the window off trying to get the panelling off. since the window was redone long after the panelling was put up, seems that it was overlapping overtop of the panelling. so is the brand new flooring, so bits of the panelling are still stuck in there around the flooring, but whatever we can't get out will be covered when the trim goes back on so that's not a huge deal.

seems to me that plaster is the way to go here, otherwise we're looking at rebuilding the doorjam and would run into issues with the window. (though if we went with drywall we could even add a bit of insulation.) the issue with plastering is the crumbly area and the hole in the concrete wall. i don't *think* there's a mould issue but it definitely smells musty in there after pulling off the panelling.

our longterm plan is to convert that cold storage into a walk-in closet, but i don't think it's going to happen just yet. i would honestly rather tear it right out but hubby doesn't think it's possible (well anything is possible, but he says it would be very difficult and expensive)

so anyways I guess I'm wondering if anyone more experienced can put in their 2 cents here, and maybe give us an idea of what we're looking at in terms of doing it ourselves vs cost if we hire this out? the areas are quite small, i don't have measurements but will get them later today as well as pics. it's half the width of a small-ish bedroom and I dunno, maybe 6 feet deep?

 

I don't know that I would even try to strip wallpaper off of unpainted drywall - you'll likely destroy the drywall in the process It would probably be better to coat the wallpaper with an oil base primer, then spackle any seems that show.

The wallpaper over concrete shouldn't be too hard to remove although I don't think I've ever run across a job where wallpaper was hung directly to a concrete wall. Is this wall above or below grade? Usually when it's below grade it's best to frame up a wall about 1" from the foundation wall and then use it for your electrical, insulation and to hang the drywall on. You can extend the window jamb without much difficulty. Does the door swing in or out?

 

here's what we're dealing with. the door swings out into the room as opposed to into the cold storage. that wall and the side of the cold room are concrete. the back and right walls are drywall. the area of missing wallpaper is from mirrored tiles the owner had put up, glued directly to the walls, and installed the wood panelling around them. tore some chunks of concrete and drywall out with them when we pried them off.
you can see in the pic how close the window is to the corner, you can also see the hole on the bottom left which was covered with a piece of styrofoam

this room is below grade

we're thinking the same thing about the wallpaper, that it can't be removed without destroying the drywall. was in touch with someone who says our best option is to replace that whole section of drywall altogether. it's not a real big area so shouldn't be too expensive. we were also told by someone else that the crumbling concrete is probably just from the nails that were removed when we pulled off the panelling, that they are barbed to hold to the concrete so it's normal for them to pull out a chunk when removing them. but i dunno, around the window seems pretty crumbly to me. and I'd honestly be surprised if he had even used the proper nails here. he seems to use quite a mish-mash of different tools and fasteners everywhere in the house.

oh the round post you can see on the right-hand wall in the foreground is a support that just had basically scrap pieces of wood around it. had to remove them to get the panelling off but will be doing basically the same treatment but with better materials i'm sure lol. not even going to attempt taking the paper off that thing :P

 

I think I'd try and remove the wallpaper from the concrete and then repair whatever damage there is. I'd rather know it's right [even if I caused a little more damage] than wonder/worry about what might be hidden. It might not be a big job to remove the door and jamb and reinstall so it swings into the cold room - where is the light switch for that room?

Priming/painting the wallpaper drywall is less work BUT replacing gives you the opportunity to inspect the framing and update the electrical or anything else to make the room work better for you and yours.

If you decide to install drywall over the concrete walls, I don't have any problem with furring strips attached to the concrete provided the other side of the wall is dry [like your cold storage rm] If the other side is earth, it's better to frame out a wall in front of the concrete wall. I don't like putting holes in a wall that is supposed to keep the basement dry!

 

thanks.
we don't want the door to swing into the cold room since we want to eventually repurpose it as a walk-in closet. but it IS dry in there thankfully. it's totally unfinished in there though, just concrete all the way around. installing drywall over strapping would be cheaper i'm sure, but framing it out properly would at least allow us to insulate that area properly so the room isn't too cold.

as for the old drywall, the drywall person we contacted said if we tried to plaster or paint over it it would curl up and look awful, and I'm inclined to agree. so looks like we'll probably be replacing that. ironically, we DO need to run some electrical in that room, but not in that end of the room. we need to install lighting on the other end that's finished. *sigh* luckily there's a random strip of molding along the ceiling corner the whole length of the room on the side of the cold room, we suspect it's hiding an open area that was used to wire the cold room, so hopefully we won't have to put holes in the ceiling to run wires.
also luckily, this is our only real problem room. other issues in the house are purely cosmetic. or else are electrical, and we have 2 electricians in the immediate family who've offered to help with that. so as long as we can get this room functional asap we shouldn't have any other major problems. the home inspection was fantastic

did i mention we're moving in this Saturday? hehe yikes

 

just an update. we decided not do this ourselves because of time constraints and hired someone to come in and do the drywall in that room. they recommended just drywalling right overtop of the old stuff so that's what happened. they said they weren't concerned with the condition of the concrete wall and that most of the holes and crumbly bits we saw were caused by us ripping out the wood panelling. the one area i was worried about was likely a bit of old water damage from old windows, there's a new window there now and everything seems pretty well sealed. they said since it's dry it's not an issue to cover over it. also drywalled right over the hole by the floor. our best guess is it was there to provide access to the drain that's there in the cold room but the previous owners had panelled over it :P and it's accessible from inside the cold room so it's a non issue.

they could have done a better job sanding but they did the whole job in 3 days for a decent price so can't argue with that. we were able to get it cleaned up and primed in time for moving day. just have to go in and paint now and then put up some trim. we know someone who does drywall and carpentry but he was out of town last week, otherwise we would have hired him to do it. when he's caught up and we're all unpacked and organized we'll get him in to look at the cold storage and see what he can come up with for that space. in the meantime we just picked out a wardrobe piece from ikea to set up in the room for a temporary closet.

and now that i've lived with the water softener for a week i kinda want to keep it (it's in the cold storage since that's where the water line comes into the house from outside. we figured if we couldn't relocate it to the furnace room we'd just get rid of it but i don't want to now lol)