Without sealing the air penetrations from conditioned to unconditioned space, the insulation R value will be strongly diminished and the dust, draftiness, high utility bills, etc will continue. 

She called letting us know the leak has started up again and there is now moisture in the basement.

The area behind the wall would be filled with gravel and it would have drains to allow any moisture that gets behind the wall to escape.  

Conduits and panel is exposed to moisture.

It's a lot easier to scrape, clean and repaint a block wall in July when your moisture in the ground is much lower.Another selling comment - make sure to disclose the seepage on the property condition report.  

This is easier to maintain than messing with paint due to high moisture / humidity issues. 

As a part of that, and being an authorized HUD brokerage, we do a lot of work with investors.To maximize penetration we have expired listings set up by county.That daily notification is something we distribute to the investors based on where they buy... some get one list, some get as many as five.It takes five minutes, and we offer it as a "service"...

An engineered wood floor of good quality( not the box store 5/16 garbage) would be a good choice and handle the temperature and moisture extremes better.

It would be my guess the vinyl hasn't been keeping the water out either.Bottom line is that no siding is going to be completely waterproof and you want to do your best to keep any source of moisture away from the home.  

However, it is a potential weak spot as it is very susceptible to moisture damage and there is a lack of accessibility to make any repairs which is why the GSE's will not underwrite them.