We have a downstairs bathroom that has seen better days, built in an extension which, our surveyor said, isn't great quality and should eventually be pulled down. We do plan to do this, but it will probably be 5 or so years before we're able to afford to replace it with something better. So, in the meantime, I've been tasked to try and make it look presentable and usable for as cheap as possible 
Of the 4 walls, 2 face into the extension, 1 into the garage and one is external. All of the walls are single-leaf breezeblock and the outside of the external wall is rendered.
I've removed the existing tiles and plasterboard as it was discoloured and musty smelling. The latter was held on by dot and dab and kind of crumbled as I removed it. I suspect that this due to a roof leak we had in the garage last year - which has now been fixed - but I can't be 100% sure that it isn't a damp issue related to the quality of the extension. Of course, it could just be due to it being 30+ years old and a bit neglected... who knows.
Anyway, I'm just looking for advice on how best to proceed.
I'm going to firstly knock off that old plasterboard adhesive so that I have a good starting point. I was then thinking of adding a couple of coats of Aquaprufe or Tanking Slurry (not sure which is suitable) on the external facing wall. I read somewhere that a coat of diluted PVA before the coating is a good idea, is this true?
Then, I think, there are a few options.
1) Use plasterboard adhesive to attach the boards to the walls, then build a small box to hide the pipework (at the bottom of the last image). I'd use "normal" board for the internal-facing walls and insulation backed for the external-facing.
2) As above, but use mushroom fixings to attach the boards to the walls.
3) Build a wooden frame, attached to the wall, and run the pipes inside that. Then use wool insulation, fitted within the frame, and then plasterboard on top of that.
Having written the options out I think the box idea sounds more sensible; firstly because space is tight but also because if there are any issues with the pipes I don't have to rip the whole wall out. So then really it's just the method of fixing.
Final question, do I need another damp-proof layer anywhere? I suppose it would only be on the external-facing wall and if I'm using insulated plasterboard then it might have one built in?
Thanks for any advice
Of the 4 walls, 2 face into the extension, 1 into the garage and one is external. All of the walls are single-leaf breezeblock and the outside of the external wall is rendered.
I've removed the existing tiles and plasterboard as it was discoloured and musty smelling. The latter was held on by dot and dab and kind of crumbled as I removed it. I suspect that this due to a roof leak we had in the garage last year - which has now been fixed - but I can't be 100% sure that it isn't a damp issue related to the quality of the extension. Of course, it could just be due to it being 30+ years old and a bit neglected... who knows.
Anyway, I'm just looking for advice on how best to proceed.
I'm going to firstly knock off that old plasterboard adhesive so that I have a good starting point. I was then thinking of adding a couple of coats of Aquaprufe or Tanking Slurry (not sure which is suitable) on the external facing wall. I read somewhere that a coat of diluted PVA before the coating is a good idea, is this true?
Then, I think, there are a few options.
1) Use plasterboard adhesive to attach the boards to the walls, then build a small box to hide the pipework (at the bottom of the last image). I'd use "normal" board for the internal-facing walls and insulation backed for the external-facing.
2) As above, but use mushroom fixings to attach the boards to the walls.
3) Build a wooden frame, attached to the wall, and run the pipes inside that. Then use wool insulation, fitted within the frame, and then plasterboard on top of that.
Having written the options out I think the box idea sounds more sensible; firstly because space is tight but also because if there are any issues with the pipes I don't have to rip the whole wall out. So then really it's just the method of fixing.
Final question, do I need another damp-proof layer anywhere? I suppose it would only be on the external-facing wall and if I'm using insulated plasterboard then it might have one built in?
Thanks for any advice