If the drywall has been unprotected since it was installed in the 1980's, it is going to be in
very rough shape. The paper surface and gypsum core has been absorbing moisture and products of combustion and this "stuff" has thoroughly permeated it.
Are the walls insulated? Vapor barrier installed?
If you want to tape this existing drywall, then you are going to have to seal the waterborne contaminants into the paper surface (prior to taping) or adhesion will be a HUGE problem...so will staining, as the mud will pull the contaminants up into itself.
I would recommend:
1) Screw off all loose sheetrock and remove "popped" nails.
2) Prime all the drywall with two coats of oil based "Enamel Undercoater" ("Original" KILZ, the stinky one). Allow for a full cure (24 hours) between coats. This will seal most of the "nasties" away for good.
3) Pole sand all surfaces and remove dust.
4) Tape/finish the joints. Use proper setting mud (Yellow box) to set your tapes or you WILL have adhesion problems going over the primed surface. Repair any damaged areas in the "field" at the same time.
5) Re-prime with another coat of Enamel U/C and allow for full cure. Closely examine taped areas for any signs of contaminants in the mud; they may still have been pulled from between the sheets by the water in the taping mud. This last coat of oil should lock any stains that did appear away for good.
6) Shoot your texture as per normal. Check for stains, spot prime if required.
7) Finish paint with a high quality semi-gloss exterior grade acrylic latex. Two coats would be recommended.
OR...
1) Tear the ####ty rotten drywall off and put it in the dump where it belongs.

..If the ceiling is blown with loose fill, board over the crap drywall with a second layer.
2) Check insulation on exterior walls; repair as required. If there
is a vapor barrier, it will be 4mil; tear it off, caulk all the wood joints with acoustical sealant, and put up 6mil poly.
3) Board/tape/texture/prime/paint as per normal...done.
Drywall must be finished asap in such a situation. Leave it more than a year and you're going to have problems...leave it for 30+ years? Then try to finish with water-based products?

Ron