Scotsman: You've come to the right place. As a small landlord I've had to deal with the same situation you're dealing with to a greater or lesser degree, but I've dealt with it many times.
You can paint over the walls with an interior oil based primer, and that will seal in the smell of the nicotine, but if it were my house, I'd remove the stain and odor by cleaning so that it's removed, not just encapsulated.
I was the landlord to the greatest chain smoking couple who ever lived. She moved in when she was pregnant with her first boy, and by the time they moved out, he was 14 years old and a chain smoker too. I will try to post pictures later on tonight. (I spent the past 5 minutes retrieving them from my old CD files.) I expect there was more tobacco smoked in that apartment than there was in any normal smoker's house over a lifetime. I took pictures to both support my claim for cleaning/damages against the tenants, and the fact that I didn't think anyone would believe how badly smoke stained the walls were without pictures as proof.
If the house was built in the 1960's, it's probably drywall walls, but could still be plaster.
Here's what you do:
1. Use a garden sprayer or hand sprayer to spray water onto the walls and ceilings, and scrub the wet walls and ceilings with a brush fitted onto a handle. (Long handle for ceilings, short or no handle for walls). Every janitorial supply store will sell brushes with TAMPICO fibers. You want a tampico fiber brush because they're soft natural bristles that water sticks to. And, you want one with a threaded hole suitable for mounting on a painting pole. So, you spray water onto the ceiling, scrub with a tampico fiber brush on a painting pole, and that will dissolve MOST of the nicotine from the wall or ceilng. Leave the tampico fiber brush soaking in a pail of water when you're spraying to rinse the nicotine off the bristles.
Now, have a second person collecting that dirty water with a wet/dry vaccuum cleaner equipped with a "squeegee nozzle". Home Depot sells accessories for Rigid wet/dry shop style vaccuum cleaners, and one accessory you can buy for $14 is a squeegee nozzle for vaccuuming water off a floor. (But, you're going to be vaccuuming the water off ceilings and walls.) Keep a damp sponge handy because the rubber squeegee will occasionally leave black marks on the paint, which are easily wiped off.
2. After you get most of it off with clean water, the house will still smell of cigarette smoke because of the residual nicotine in the paint. You can easily remove this with bleach. I've found that straight bleach will remove the nicotine stain quickly without affecting the colour of the paint (and I can explain why if you're interested), but it's better to dilute the bleach with 10 parts water because:
1. if the diluted bleach drips into your eye while you're looking up to spray it on or scrub it, it's not as serious a situation as if undiluted bleach had dripped into your eye. You have plenty of time to rinse your eye out if it starts to bother you. Still, you might want to wear safety goggles when working with bleach, diluted or not.
2. the fumes that you have working with straight bleach can become very strong and can badly irritate your throat. You won't smell hardly anything with the bleach diluted with 10 parts water.
3. you'll find that with the bleach diluted 10:1, it will still get the paint equally clean, but it just won't happen as quickly. You put the diluted bleach on, scrub it with the tampico fiber brush, let it sit for a half minute, and the area will revert back to the original paint colour before your very eyes. Then, vaccuum off the spent bleach with the wet/dry vaccuum cleaner.
Place linen bed sheets down on carpeted floors which could be damaged if bleach drips on them. You can buy old bed linens cheap from the Salvation Army or other thrift stores. Alternatively, just use old tarps or something. It's a good idea to have bed linens on the floor anyhow simply so that you won't be working on a wet slippery floor, as it's easy to slip and fall. There will be plenty of dripping from the ceiling. Also, if you go to any place that sells agricultural spraying supplies, they will be able to replace the nozzle on your garden sprayer with a tip that will allow you to change nozzles for a heavier or lighter spray. These nozzles typically cost about $1 each, so it's a good idea to have several of them for various kinds of spraying. I make a great deal of use of my two garden sprayers for cleaning, so I have a full set of about a dozen nozzles I can use on each of them to match the job requirements.
I have a special tool made for cleaning walls and ceilings called a Taski "Vertica" system, which is basically a squeegee that can be connected to a wet/dry vaccuum cleaner:
But, since you only need to do this once, I'd recommend that you borrow or buy a shop style wet/dry vaccuum cleaner and get a Rigid squeegee nozzle from Home Depot. All wet/dry shop style vaccuum cleaners use a 2 1/2 inch diameter hose, and the Rigid nozzle will fit that hose size. Sears also sells a similar squeegee nozzle that will also fit a 2 1/2 inch hose for their "Craftsman" line of wet/dry vaccuum cleaners. Both work equally well. Alternatively, you might be able to find a Janitorial Supply Store that rents the Taski Vertica system. It's about $200 to buy, so renting it shouldn't be that expensive.
Because you can spray a large area quickly, and the tampico fiber brush will typically be 10 inches wide while the wet/dry vaccuum nozzle will be about 12 inches wide, two people working together can easily do a room in a half day. Working by myself, I can do an entire apartment in 3 or 4 days, but that includes hallways, bathrooms, doors, etc.
After using the clean water then bleach to clean the walls, the walls will still have some residual bleach on them. I'd recommend you remove the residual bleach by the same method before repainting, if you intend to repaint. Just spray the water on, agitate with the tampico fiber brush, and vaccuum the soiled water off.
You can also use an Atlantic Bee Mop in areas which are hard to reach with the wet/dry nozzle.
Also, rinse any sponges you use with bleach out very well after you finish using them. Sponges are made of cellulose, and bleach will deteriorate cellulose if it's left on for too long. If you leave a sponge wet with bleach overnight, it'll be mush in the morning.
Hope this helps.