We have a 1970's split level and we're in the process of redoing the basement. The previous homeowners finished it themselves, applying drywall first and paneling over that w/out taping or mudding. We have gotten the paneling off and are left with drywall seams over the corners of the windows, seams that are not staggered, swirls of construction adhesive and/or torn paper, and pet stains at the base of two corners where a dog lived for 15 years. The floor is concrete, so the stains also reside in the concrete. I'll be treating the concrete with Natures Miracle before we recarpet, and we'll be using a pad containing enzymes. For the walls, we have a few options ahead of us and I need some advice.
1. Drywall over the old drywall, trying to seal the stains with Kilz or polyurethane and seaming correctly this time.
2. Trying to save the old drywall by redoing the panels that are seemed improperly, sanding and skim coating the adhesive swirls and sealing the stains with Kilz or polyurethane.
3. Ripping down and starting fresh.
I'm nervous about starting anew because three walls are exterior walls and I do not want to damage the insulation or the firring strips that lie over the cinderblock half-wall. Any and all advice would be appreciated.