Hi Mondo,

An acrylic enamel (water-based) would work best for you and this situation. All loose/flaking paint should be removed, but it is not necessary to remove all paint. If the old paint is thick, you may want to use some fine sandpaper and feather the edges for a smooth finish. If the old paint is glossy, use fine sandpaper to de-gloss it. Water should not bead on it, if it does, the new paint will not stick. As far as the damp area on the floor, are you sure there is no plumbing running in or near that area? If not, you may check into a product I use with tile called RedGuard. There are also a few other products for sealing basements, etc.