Hi, Angie. The texture paint is a bad choice. It will show the cracks very quickly if the foundation is still moving and/or water is getting in. These are the first things to consider since if the house is still moving or settling, any kind of walls you install will eventually crack too. Same thing with water.
About the easiest way to deal with your walls though is to install drywall over them and then paint. And start with the ceilings since they are probably involved also. First find the joist and studs with a stud finder and mark the locations. Then put a sheet of drywall in position and screw through the drywall into the joists or studs. Use 5/8" drywall on the ceiling and 1/2" on the walls. Mud and tape the joints between the sheets. Check back for the procedure on this when you are ready. Then seal the drywall and you can paint or wallpaper or plaster.
This is a relatively easy process that requires 2 people and it is not real expensive to do. If you have hardwood moldings around windows, crown molding or around the base of the walls, you might want to strip the old finish and refinish before you start on the walls.