Most the time, it's hard to keep moisture or water out of the basement. Anything below ground level has a good chance, eventually of having problems with water.

The picture above is showing the basement wall and you can see the discoloration in the lower block wall. It's not uncommon to have lower basement wall staining. These are the areas in the basement that are normally the most difficult to seal, on the outside.

This will also be the area where moisture, or water on the other side of this wall will accumulate.

There's really not a whole lot you can do about this problem. To fix it correctly, you would need to remove the dirt on the other side of the wall, clean the exterior block wall, the best you can, and the better you can clean the wall, the better your chances are that the waterproofing will stick to the block wall. Make sure it's clean. Then you can apply your waterproofing materials.

This will also add to the life of the waterproofing and adding to the life of the waterproofing will add additional years to your basement foundation and walls.

Simply cleaning the interior and removing the the basement stains and then repainting the wall, will eventually lead to the paint peeling off or mold growing in between the paint and the block.

Home Repair Tip - Simply keep the area clean and I wouldn't recommend painting over it or building a wall to cover it up. Keep the basement well ventilated and watch these areas for mold and mildew, and the biggest problem over time, could be the deterioration of the concrete block wall. Try to keep the wall as dry as possible and this can be done by fans or heaters.