Ncdel--why not go ahead and paint around the closet? You might be in this house for more than two years--you never know. Or you could paint the inside all pink and purple, or whatever your daughter's favorite colors are. Another consideration is that this is a playroom. I suspect, when you start getting this house ready to sell, you are going to have to paint the playroom anyway--kids do tend to make marks on the walls, even when they are trying not to. Balls get bounced, toy trucks are let loose, stuff happens. And by the time you move, your daughter may have outgrown the dress-up stage. So if you really want to give her a special little girly space, I'd say go ahead and do it. If you knew for certain sure that you would be moving in a year, I'd say don't do it. But a "maybe" move in a couple of years? You don't want to spend the next couple of years feeling as if you can't do anything you really want to do in the house because you are moving soon. Two years is a long time to live in a place without changing it to suit you and your family. I know. My dad was in the military and we moved every year or two. The longest we stayed in any one house was two and a half years. My parents were adamantly opposed to doing anything to any house we lived in--or maybe it was that they didn't want to spend a single cent on something that would be left behind when we moved (they were very frugal). We coped with furniture that didn't fit, curtains that didn't cover windows, inadequate storage in many houses, weird wall colors that clashed with our furniture, you name it. And even my parents would complain about the poor lighting in a room, or the lack of storage space in the kitchen, or how echo-y a certain room was--all of which could have been solved with less than $100 spent on lamps, or a microwave cart or some curtains or a small area rug. I think this is why I am so concerned with how my surroundings look today. I'm not saying go hog wild and spend tons of money and time and effort to make the house totally "you." If you are moving in a few years, that would be a lot of investment that you wouldn't get back. But a few little projects, the ones that speak to you the most and that would make you feel more at home in your own home--things that you can do in a day or that cost less than $200--go ahead and do a few of them. There's a happy medium between doing nothing to personalize the space and personalizing every square inch of the house. And if you don't want to paint, do check out the wall decals that are so popular right now--you could decal the closet door and just peel them off when you move.

Storage, storage, and more storage. Think about how you want to use the space, and plan plenty of closets to accommodate all the things required. Otherwise, you will have a job on your hands to keep it from getting junky. So here is more than you wanted to know about what we did: When we did our basement, which also included a long one-car garage along half of one side, we put in a u-shaped light shop space (no power tools except drills and the like) at the end with a deep sink in the center of the U, one side dedicated to plant care and flower arranging, peg board (painted white) lining the walls up to 6'8", and a deep shelf on ordinary white hardware store brackets above that. I recycled two L-shaped wooden countertops that were cast-offs from another project, stained them, and finished them with spar varnish. I designed the supporting structure (painted dark gray) to accommodate three mobile storage basket units that I already had. I painted the wall over the sink (no pegboard there) with chalkboard paint, which was great for jotting down measurements and things to go on the shopping list. We used plain old rectangular florescent tube fixtures in the ceiling, which gave exactly the kind of clean light we needed, and a couple of boxes of peel and stick vinyl tiles on the concrete floor. The short wall of the house which had the garage door and the entry door from the driveway was our foul-weather entrance, and had a fireplace in it, so I allocated half that space to a warm sitting area, and put a trestle table to serve as a desk behind the small sofa that faced the fireplace. I dealt with the high little windows along the long wall (with a lovely view of the bottoms of the boxwoods along the front of the house) like this: Behind that area, I created a hallway to the back space by building a cedar closet on one side, which ran under the staircase, and a long deep closet with three doors in the wall and deep shelves lining the whole thing on the other. Where the cedar closet ended, under the low part of the stairs, I built in a niche for a long 2-drawer lateral file cabinet. We had the stairs rebuilt to create a 3 x 3 landing at the 3rd stair up, so we could turn the bottom stairs to face into that hall, and create an easier and more attractive entry to upstairs. Beyond that hallway was enough space for a pantry closet and a wine closet along the short wall, and a chest of drawers perpendicular to that. Beyond the stairway was the door to a new laundry room and a walled-off area for the HVAC and hot water tank (with louvered doors), and between the laundry room and the back wall of the garage workspace, we put in a big bathroom with changing space for anyone using the pool, or coming in from the garden all covered with muck. We did the bathroom very economically - the things we spent any money on were a Venetian marble shower stall and long countertop with an integral sink. Instead of a vanity, we mirrored the wall and attached a simple framework with a stained birch plywood fascia along the wall to support the countertop, built a 10" high plinth along the floor under it, and put big baskets of towels and washing and sun supplies on it. Then we ran a 2x10 along the wall opposite the shower with many hooks for damp towels and bathing suits, and added a simple garden bench. I loved it. It made my too-big house completely manageable.

I sold my house with an unfinished basement this past summer that was located in Northern VA. I would recommend you finish off your laundry space for your own enjoyment, not necessarily because it may add value. Your descriptions of the space and your comments lead me to believe you would like to have that renovation for yourself. You can replace the concrete sink with a sink/cabinet from Lowes/Home Depot for a couple of hundred dollars. As others pointed out, you can brighten up the space for minimal outlay. (Definitely get rid of that floor before you market your house. Buyers do notice dirt and perceived lack of maintenance. Keeping my house clean and maintained was how I was able to get it sold in a soft market last summer, despite the disadvantage of the unfinished basement).

Probably most critical -- moisture management. Be sure that you have good drainage moving water away from the exterior, and have a plan to address any issues with high humidity or dampness wicking through the floor or walls (especially if you want to use carpeting, wood or laminate)