You need to make sure whatever you use is a "DTM" primer - direct-to-metal. The instructions on the can are usually awful, so you should check out the manufacturer's website.
If you're using the right primer and having adhesion issues, the most common cause is probably not prepping the surface properly before applying the primer. Usually you need to wash very thoroughly (if you paint dirt, the paint will only be adhered as well as the dirt is), followed by a sanding or scuffing. Again ,the manufacturer's website will give you directions.
If you need to use emery paper to remove it, I'd say you're OK. It it comes off with a wipe down with a cloth I'd say that's a problem. Emery is an abrasive designed to remove material, after all.
As an aside, if you have an iron structure you want to protect from corrosion, I'd look at products from POR-15. They make some very nice corrosion resistant coatings. I'd also have recommended a 2k epoxy primer but it sounds like you're past that point already.
EDIT: Oops, I didn't notice how old this one was. Well, I hope whatever the O Pwould up doing worked out well :)
I think your third idea will work and look the best.
First fill the void with expanding foam, allow the foam to cure, then cut it off flush with the face of the existing door trim.
Then cover the area with whatever molding/trim you find most aesthetically pleasing. You may wish to miter or cope the corners to get a more finished appearance.
Best Answer
The painted coating (it looks to be at least the most recent coat of paint and an additional layer below, of either paint or primer) has obviously failed. The cause of the failure is most likely inadequate surface preparation prior to application, exacerbated by high-humidity conditions.
It is very unlikely that the ceiling plaster itself is "off-gassing" or that it is, in and of itself, the cause of any odor. What is likely is that the odor is mildew growth, of which there are some tell-tale signs of along the edge of the wall.
You need to:
NOTE- a special bonding primer (e.g. shellac) is not necessary if you prep the job as described.
NOTE- a paint with a sheen, such as gloss or semi-gloss, would tend to resist problems associated with moisture better than flat paints.
NOTE- pro-grade applicators and high-quality paints result in a better looking, better performing, and easier job.
NOTE- for longevity and bio-growth prevention, you should ensure there is adequate ventilation. Now is the time to consider upgrading your exhaust fan.