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If the paint has failed in so many spots as you seem to indicate, then there is a chance that it was not primed properly. If so, then you should strip or scrape and remove all the old paint.
As with the weakest link of a chain, every succesive layer of paint is only as strong and long-lasting as the weakest layer underneath it. Moreover, with the Drylock paint, you might end up "drylocking" water-soluable latex paint underneath the drylock layer. That layer will definitely fail because it will soak in moisture that the drylock paint traps between the drylock paint and the outside wall.