(I assume this is b/c of all the texture in the shakes, maybe it takes a long time to get it all coated.) 

Thicker drywall (5/8s instead of 3/8)Stain resistant paint or at least easy to clean up paint (this may vary cause in most causes tenants put so much holes and dents in walls, the turnover for rentals usually require repainting anyways)Easy to clean back splash (less grout = less stuck dirt, so consider the size material)Countertop type (granite and marble stains and require to be polished and resealed eventually; quartz is stronger and stain resistant, but cost twice as much)For appliances, I suggest going to local appliance stores not big box stores.  

It’s just coated concrete down there .

Once we have eliminated the mold we would paint with primer then 3 coats of paint 

Cost includes rough and finish sanding existing hardwood floors, applying stain, and aminimum of three (3) polyurethane coats on approximately 450 square feet.

Maybe apply some kind of coating to the bottom of the wall?

I stain and coat them with poly. 

I need to replace the cabinets, put down some LVT flooring, skim coat and paint the ceiling, but I'm unsure what to do with the walls. 

@David HallnerSpellcheck got me, meant to say coats, not cost.

It's your decision but as long as there are no other issues and as long as the colour of her money is green why care if there are no other issues.You need to grow thicker skin.