where is the pics
The question u have to ask yourself what are u trying to achieve here, in terms of thermal value and needing a high impact area
i would avoid sand and cement as s&c has no thermal value whatsoever, although it is solid..however u will have to use s&c on the int/ext wall. Backing plaster in your case Hardwall, has decent thermal value and it is quite tough. Last option is plasterboard which has the highest thermal value and probably the easiest to skim on, but very hollow. But as your gaff is the old solid walls which are damp prone id use render/hardwall !!
Personally, i would not put a bag of hardwall any where near a damp issue. . you will just add to the problem.