Well, you're part-way there. You need to do as GOOD a job as possible in reducing or even eliminating the water coming into the basement.
Normal humidity in a basement can be 'controlled' via a dehumidifier. However, condensation, dripping, or 'larger' formations of water are a bigger problem. First, I'd take a look outside the house (around the foundation on ALL sides) to see if you have gutters and downspouts that work, don't leak, and dump the water AWAY from the foundation. If gutters are missing or failing, repair them. If the landscape around the foundation slopes towards the house or allows water to 'pool', this will promote water to flow into the basement. What I just mentioned are the MOST common 'sources' of water in a basement.
Applying a 'material' to the wall won't prevent the water from coming in. Hydrostatic pressure will do as you've seen - It will 'push' the paint/sealer off of the wall, and flake. There are PLENTY of sealers out there for the walls.
RE: Your floor - You didn't say what it was. Assuming it's concrete, you can 'fill' in the low spots. However, you need to read the Instructions on the can of filler and see how 'thick' it will allow you to go. I suggest you use an inexpensiver Berber carpet due to the water and moisture issues (even if you can 'control' them.) I STRONGLY suggest you find a book or 2 that specifically talks about Finishing A Basement. I'd read it before you do any work. Since you're saving some $$$ by doing the work yourself, spend some of that saved $$$ and buy a couple of good books. It's $$$ well spent!