Looks like saltpetre which is leaching through the brick. You may hae waterproofed the outside but what about water leaching from the roof. Water will find a way.... Here is an interesting link... http://www.arcane-industries.co.uk/l1/p281-dampness-saltpetre-condensation.html

As for the question you've asked Light pink or light lemon color to the walls would make it look good and Dulux paints. Dulux because Asian paints are mostly when used on decorative walls and for a simple light color Dulux would be the better option and pocket friendly compared to Asian.

The reference image wall color looks like Song of Nature 8401 or Pineview 8400 from Asian. Combine this with Nickel Grey 6126 and you should be good to go. Just paint the recess in accent color and the rest in grey. For getting the sense of color in the actual setup, we suggest you get a big swatch done and look at it in daylight and then in the evening with the warm lights on. The look will change substantially in both cases. You will be able to decide better.

Lighting is both warm and white, will this color be too dark ? My living room does not get direct light bit has enough natural light. Is this color dark for a living room. I was trying to match sherwin williams evergreen fog