Rec room in basement from 70s facelift or renovation

[Sjöben]

Hello

Like many others in the forum, I have a basement recreation room that, after 50 years, needs renovation. I have been quite cautious with the demolition, primarily to examine the condition and construction.

As expected, there are wooden studs directly on the walls made of lecablocks, insulated from floor to ceiling covered with gypsum.
The floor is framed with wooden studs, insulated and covered with pine planks.
To my great surprise, there is no sign of moisture, neither visible nor noticeable smell, it just smells old, like dust.

Therefore, I have started considering a "facelift" instead, provided that the entire room looks like the part I've examined.

I was thinking of keeping the framing insulation and just replacing the wall and floor coverings. OSB and gypsum on the wall, floor particle board and possibly floor gypsum on the floor with parquet. With the motivation why change something that seems to work (even if it is wrong)
My question is really whether the new surface layer will obviously negatively affect the function so I end up having to redo everything with steel studs, etc. as I originally planned.

 

[Sjöben]

This is what it looks like where I opened. In this corner, rainwater has run down into a "stenkista" outside the wall. I assume into stenkista because the downpipe ended 10cm below the ground where there is only gravel, now I am leading the water a few meters away from the wall instead. My assessment was that it would be worst there if the drainage done in 2002 would be bad.