that's a loaded question, in the "East" we like to do like Colson described, then add platon membrane and 2" foam while you're there, and drain tile and gravel at the footer obviously.
In Eastern Washington, you may get away with skipping that if the site is right, and the ground slopes away from the house. No sealer that goes inside can be as effective as one on the outside, but maybe you don't need much?
The Kilz that smells is probably the original shellac based primer. Kilz has turned into a brand name for lots of different primers, several would probably work for what you want, but know what you're getting.