I'm about to embark on a similar trek as okcnewbie in a few weeks. I'm going to replace the "Space Age" walls that were supposed to last a lifetime (I guess they meant a dog's lifetime). Planning on using underlayment-grade 3/4 PT plywood. Local lumber yard has the stuff and it's far, FAR better than the garbage Home Depot sells. I'm planning on priming it with Kilz indoor/outdoor primer, installing it, then letting it sit for 3 months before properly painting it. I won't install the liner until the spring as there's no point. Come spring, I'll use your idea of 3m spray adhesive and wall foam under the liner, and re-level and clean up the sand base.

Big job....