The 1st floor bathroom has significant water damage to the drywall in which I will need to put in a new bath fitter and repair any and all moisture damaged areas. 3.) 

Hi John, Yes, the ADU is considered new construction as the garage was never considered “living space” and you’ll have to make major changes to bring it up to code (ie: footing where the garage door used to be, insulation, drywall, new ceiling joists to hang the drywall because the old ones won’t meet code, moisture barrier or new slab for the concrete).  

Then it hides moisture behind it as well.

The landlord told us the excess moisture was caused by my roommate fiddling with the radiator and causing steam to leak. 

If it's the bathroom, make sure they are ventilating until all the moisture is removed from the room, every time.

Post a picture I see mold and algae on siding a lot has to do with the way the suns hit it or near a dryer vent where moisture comes out it gets dark around that 

@Jacobus Rex Even if the basement is never going to be totally waterproof, there are different ways to mitigate moisture and choose durable, waterproof finishes that could help add livable finished square footage.

Do you have a moisture issue or tenant issue?

if solid concrete, i wonder why the crumbling - a fire, moisture problems, etc? 

Considering the snow/moisture in the area, my personal preference is luxury vinyl plank flooring.