Yep use the Kilz, ditch the mylar. I am very allergic to molds, I can smell a house with mold from the outside I am so sensitive......

The plastic against the cold wall (I am assuming concrete....if 2x2 wall you need more work) keeps a very humid environment as the concrete will be releasing the water for years after setting.....perfect environment for mold and the black mold is bad, bad stuff.....full strength bleach my friend, full strength and maybe some alcohol too as a final wash.

Flat white paint seems better than the mylar and such but every few years it is necessary to repaint as it does yellow a little.