Hi Glenn,
Well, I started scraping the paint off and while I was doing so, I realized that some of the plaster was sort of loose too (turns out the paint was on plaster, not concrete). So I began chipping at the plaster. Now I have a fairly large plaster hole in the wall (picture below). And I can keep chipping away at the weak parts further, but figured I'd leave it alone for now.
I felt the concrete underneathe, and while it wasn't damp, it didn't feel completely dry. There's some cracks running along in the concrete. I'm wondering if the moisture's coming from there.
So should I keep chipping away the plaster in that area? I'm thinking I should caulk the concrete cracks to prevent any moisture from seeping through. And then replaster the area. But I've never done this before, so it's possible I'm completely wrong. Do you have any suggestions? Thanks.