Fill the big holes and then resurface with a self leveling compound I would not lay carpet on this concrete flooring , I would install dricore and install carpet on that.

Regarding the basement floor: It looks like the concrete floor in your basement was installed directly on top of the native soil. There is no granular layer below the concrete. The proper method is install a new concrete floor in a basement overtop of 4" - 6" of crushed stone. This provides separation between the soil and the concrete floor. Without this separation, moisture below the floor can get sucked into concrete floor and lead to dampness and mildew/mould in the carpet. We would suggest that patch the floor and install dricore or a similar system over top of the concrete and then install the carpet.

This is such an interesting question for me.

Without a vapor barrier under the slab, what keeps the moisture and mold from forming under the dricore?

Would the healthiest option be to patch and skim coat the floor. And then lay a breathable, non-padded, carpet over? Or perhaps tile with grout that could dissipate the moisture that will wick up through the cement?

And of course a dehumidifier!

Dricore has a layer that does not allow mold to grow that is why it is reccommended in the basement areas.

All very good comments, but based on the area, I would also suggest to add a layer of interior waterproofing to your foundation walls (up to exterior grade) wrapped to a new interior weeping tile and all tied, connected and sealed to a new sump pump. Check your local building codes for details, and installation.

This is a complicated problem. Geometra Design has offered up a very sound piece of advice. You need moisture proofing and you need work on the slab. This is probably not going to be a quick fix.

DryCore is a misnomer. I've spoken with the technical department regarding slabs that have had issues with moisture (either standing water, sweating slab, or occasional flooding) and they do NOT recommend using DryCore alone. The most common DryCore has OSB attached to it. This can not handle moisture. This product requires a vapour barrier underneath OR you have to move the the PLASTIC ONLY version...which makes it very difficult to install carpet over top.

That is beside the point. I wouldn't do any form of finishing until you've contacted a cement slab expert (or two) to have their opinions about what is happening. Without the proper fix you won't be able to finish the space...no matter what form of subfloor you work with.

Thanks for the clarification, Cancork!!

There is is. From a Builder who knows. Thanks GN!

We can't afford to dig out and put a new slab of concrete. Is there a floor leveler that can be used?

The problem is, there is nothing to "level". The concrete has "blown through". I believe that is raw dirt we can see there. You can patch and patch and patch and patch but there isn't enough cement to work with here.

Once you patch it, you will have to seal it with a spray on/roll on application (two coats please). Before you do that, you have to know how much moisture is moving through the walls/cement. That alone can cost another $2,000 - $5,000 IF you can find someone willing to put their name on the line.

Here is a nice little write up of some of the basics:

http://www.hsh.k12.nf.ca/technology/cmhc/english/book/ch06/c/01/index.htm

x2 what Cancork Floor said, and if this job is not done right, you will have a major headache down the road and you will end up spending 5 times more to remedy the problem. Seen that happen dozen of times, not to mention leaving it like this, its hazardous to your health and everyone else who lives there.
I'm not sure where you from, but get a few prices from reputable contractors and see what they want to do that, and it will be money well spent, not to mention this is only a 2 days job if that.

Good luck

Do it properly - or do nothing at all. If you cannot afford a proper repair of the floor better to save your money until you can. Any cosmetic or band-aid solution would be a mistake.

GN Builders is absolutely right. You need to knock out the existing and do it right, or don't try to finish this floor.

I'm not a builder, but I have plenty experience hiring them. Do the job right and hire the most qualified person you can find. When shortcuts are taken, you pay many times over.