Regular framing and building wood is kiln dried down to a low level of moisture, regular paint is designed for this.  

Pull down the drywall until you get to drywall with zero moisture damage.

or breathability and recurring moisture too ?

Then if the house every floods, the paint keeps the water from penetrating the subfloor and crawl space, and you can hopefully just vacuum the water up with a wet/dry vac.

About a foot from the bottom up has suffered rain/moisture damage.

Old windows probably won't be a big draw or something a long term tenant wants to deal with, once they have condensation and mold from the moisture.

Get to the root source of the moisture problem and remedy it.Then do the following.1.

If you're installing over a plywood or OSB subfloor, you need to install cement board and lay your tile with modified thinset mortarI would use a penetrating sealer on the tile. 511 Impregnator, available at Home Depot, is probably the best-known and most effective variety of this kind of sealer.

Only part of a room or area was affected, there is little or no wet carpet, and the moisture has only affected materials with a low permeance rate, such as plywood or concrete.• Class 2.

Problem is the carpet above created excess moisture with the below plywood which within one year caused the wood to be warped.