Moisture-proofing your Basement
Finishing a basement is a popular way to increase living space, but they are prone to moisture problems. When I was growing up, I remember having to go downstairs with towels to sop up water from the carpet whenever we had a heavy rainstorm. When I bought my first house, I discovered a problem with moisture that would lead to me gutting the entire basement. Here are some tips to help you keep your basement high and dry.
Do you have a moisture problem?
In a basement, you can have moisture infiltrating your foundation walls or coming up from the concrete slab. Before finishing a basement, you need to be sure that neither is occurring.
The Moisture Test
Take a piece of vapour barrier or other plastic or tin foil and tape it in place on the floor or on the foundation wall. Be sure to seal all edges with tape so it is air tight. If moisture collects on the underside of the plastic, you have moisture infiltration. Moisture collecting on the outside of the plastic is condensation caused by moist air coming in contact with a cold surface. This can be controlled by adjusting the humidity using a dehumidifier. It will also be eliminated by proper installation of insulation and vapour barrier. The object is to prevent warm moist air from coming in contact with cold surfaces.
Preventing Moisture Infiltration
Foundation moisture
There are numerous ways to prevent moisture from coming through the foundation. A membrane system can be installed on the exterior of the foundation. Most new houses have some sort of exterior membrane system. Amembrane can also be installed inside, to direct any moisture coming in to an interior weeping tile and sump pump system. Membranes work with either block or poured foundations.
Block foundations usually have weeping holes drilled in the lowest blocks below the slab to prevent the build-up of hydrostatic pressure. Any water coming in through the weeping holes is controlled by a weeping tile system.
The easiest DIY solution is to use a product such as Xypex or Drylok to seal the foundation walls. Be sure to prepare the surfaces according to the instructions.

I have used both of these products and highly recommend Xypex, which works through a crystallization process. The surface has to be saturated prior to applying the product, and once the product is applied it must be kept damp for a period of a couple of days. This allows for the formulation of crystal which grow into the nooks and crannies, becoming a permanent part of the structure. The drawback is that the product has to be kept damp. You could probably use a spray bottle filled with water to keep the mess down. I didn't need to worry about making a mess, so I used my garden hose with the nozzle set to a light mist, and as a result, I saved a lot of time (and repetitive stress on my trigger finger), though I ended up with quite a bit of water on the floor.

Drylok is not as messy and applies as a thick paint. It is more of a surface coating, but does contain Portland cement which bonds it to the wall surface.
Slab moisture

Even if you don't have moisture coming up through the slab, you should still use a moisture barrier and subfloor system. Products such as DriCore (left) and ThermalDryfeature a dimpled membrane that channels any condensation or seepage to your floor drain while raising your subfloor off of the concrete. DriCore comes with waferboard attached to the membrane. The added benefit of these products is that the air space they create acts as insulation: the floor is raised off of the cold concrete which helps keep your feet warm.
Other steps for a dry basement
Basement leaks can be minimized by taking a few simple steps to keep water away from the foundation. Make sure your eavestroughs and gutters are in good order and that water is directed away from the house. Landscaping should be sloped away from the house as well. These simple steps can go a long way to solving some leaky foundations.
A search of the Internet turned up numerous waterproofing systems and products. Which ones are right for you will depend on your budget and the extent of the moisture problems you have. I have only briefly touched on the products of which I have some familiarity.