Experts, more challenges await! It's an old house with cement block unit foundation. Obviously it cracked over the years and there is no waterproofing under ground. Rather than digging it all up a neighbor suggested: * install thick plastic sheet/foil from foundation wall going out 10ft * glue it water tight to the wall * try to build a little slope for water to run off * cover with some rubber mulch Questions: * sounds like a good idea but what about moisture getting stuck underneath? * how about termites ants, rodents???? * isn't it "suffocating" the soil? * any ideas how this can be improved?

That may help for water intrusion, but likely would not do much to reduce moisture and high humidity.

Buried membrane water diverters help manage bulk water, but does nothing for managing groundwater. Going 10' is more than most, and since it needs a significant slope it would make for a fairly deep trench. Most are set up to be ~12-18" deep at the foundation and go out 3-4'. It needs a slope of at least an inch per foot, more if not supported by foam board insulation or other flat semi-rigid material. EPDM roofing membrane material is a better choice the than poly or foil due to it's superior puncture resistance, but poly works (6 mil minimum, 10mil is better.) Foils are likely to corrode through in short years when buried- wouldn't use that.

Adhesives won't cut it for keeping the membrane attached to the foundation- it needs some sort of mechanical retention. ISee the picture on the 5th page (.pdf pagination) of this magazine reprint:

http://www.finehomebuilding.com/PDF/Free/021111098.pdf

If you use poly, any portion that is above grade will deteriorate with exposure to light and needs to be coated/painted with something UV resistant and rugged, maybe with fiber-reinforced liquid roofing patch or similar.

At my own home we have a roof valley that drains directly in front of a masonry chimney that has treated this way. Bulk water had previously been weeping onto the basement slab during & after heavy rains. The water is now diverted to a garden bed 25-30' down-slope from the house with the assistance of a French drain, and the bulk water intrusion has not recurred in the intervening ~4 years (despite some record downpours during that time frame.) It was backfilled with a combination of 3/4" screenings capped with larger natural flat stone harvested from the property. Since it's wet often and quite a bit of organic debris (mostly spruce needles) gets washed from the roof it's now growing a bit of moss etc on the surface.

Back filling with sand and using copper flashing on the "termination bar" holding the membrane (see the picture in that document) to the foundation would pretty much block termites

Once you have the bulk water issues under control on the exterior, touching up the mortar (or even a full parge of lime mortar) on the blocks followed by an inch or two of closed cell spray foam would limit the rate of ground water migration through the wall in to the basement in either vapor or liquid form.