Admittedly, not the solutions or everyone.

First step would be to discuss with existing lender to see if they have a solution. 

Just a little bit of basic modern remodeling and I'm good to go.

I don't know (recall) if they are in local ordinances but I do recall vaguely seeing some legal / ordinance type of material detailing when it can and cannot be done, regarding building in a way that directs water towards a neigbors property.I don't know Chicago that well, but as a homeowner I would try calling your local building and permit center and see if one of the local inspectors can direct you to the code section to read.I'd do that before anything else because knowledge of those ordinances will arm you / prepare you best to approach the other parties.With regards to the possibility of 'dealing' with the water, I'd be thinking about ways to do that, too - in the event that the above / negotiating an alternative solution is not fruitful. 

I'm not an electrician but with today's demand for electricity to run computers, TVs, appliances, I don't if knob and tube can handle the load of a modern lifestyle.

@Michael Baum gave excellent advice - if it is possible to get a long-term renter so you can make a better return, that seems like a good solution until the market is better.  

When you leave, you're going to want purty-purty modern-modern stylish floors to appeal to buyers.

Here's a quick one I'm hoping someone would be able to shed some light or experience on - I have heard from some people that it is a great idea to fit out an apartment with nice and modern furniture, maintain it well and rent it out for a couple of thousand Rand more than a similar empty unit.

You must be consistent with your marketing efforts so that you are the solution lying on their table when that time comes. 

Modern consumers are finding just about everything they do, except perhaps pay with cash, can start and end with their credit report.Don’t let bad credit hold you back; build it up and use it to make life better!