Mix the TSP cleaner in a bucket. Use 1 part TSP to 10 parts warm water.
Apply the mixture to the drywall with a sponge. It is easier to work in small areas of 3-by-3 feet, rather than doing the entire wall at once. Let the mixture set on the wall for at least five minutes.
Scrape off the texture with a putty knife. Do not use a metal knife, it will gouge the drywall. Scrape the texture off and clean the edge of the knife as needed to remove the material build-up.
Sand the area smooth with a medium-grit sanding block. Some of the texture may not come off at first. Sand the texture down. If it is still bumpy, apply more of the TSP mixture and re-scrape.
Prime the walls with interior latex primer. Whether you plan to paint or use wallpaper, primer is necessary. Apply one coat with a paint roller and let it dry for at least four hours.
Paint the wall with latex paint in the color of your choice. Roll on a thin coat of paint and let it dry for four hours. If necessary, add a second coat.
Apply pre-pasted wallpaper to the wall, if you're not painting the drywall. This type of wallpaper can be installed by wetting down the back and then pressing it firmly onto the wall. You may need to apply extra adhesive in the corners to keep it from curling back.