If you have a damp or wet basement, you have to fix it before you start any finishing work. The good news is that most water problems can be remedied by two measures: grading the soil to slope away from the foundation and adding or repairing gutters and downspouts. If these steps don't work, you'll have to take more extreme measures like adding exterior drain tile and waterproofing the walls or adding interior drain tile that empties into a sump basket with a pump. Eliminating water problems is time consuming and expensive, but it's critical to prevent a moldy and ruined finished basement.