Hello Steve,
I'm sorry to read of your discovery, and unfortunately the answer may not be as clear cut as you would like.
When I reply to this type of question I take time to carefully consider what I write, and I note that several other posts have already been made, and they seem to be offering portions of the advice I would give, so If I seem repeat anything please forgive me.
The basic question you ask is if your dealers warranty will cover any damp issues? There is no legislation that dictates what sellers or manufactures after sales warranties must include so they can set out their own terms and conditions. But many will use a pre-configured package by an insurance company. Either way, the only way to know if your package include water ingress is to read the T&C of the policy. Due to the age of the caravan the Manufacturers guarantee is long expired. So only the sellers S/H sales warranty will have been offered.
Its always best to try and settle 'warranty' issues amicably, but there may be other legal avenues to try if you feel the dealer is not being fair.
Whenever you make a retail purchase (new or second hand) the Sale of Goods Act (SoGA) kicks in. These are your statutory rights, and in a nut shell they require goods to be "As described and fit for purpose"
You may have heard of a Latin phrase "Caveat Emptor" which means "Buyer Beware" This is a primary key to retail purchases. It means you (the customer) must ensure the goods you purchase are to the standard you require and will satisfy your intended purpose. You are expected to ask questions of the seller before you purchase, and by dint of the Trades Descriptions Regulations and the Advertising Standards Regulations, this imposes a duty on retailers to answer or provide accurate responses, In many cases the seller will pre-empt most questions by publishing a description/specification.
The seller only has to provide accurate information. They are not obliged to publish ALL information. Therefore don't assume anything missing from the published details as being ok. Especially with second hand goods you have to "read between the lines" which is why the savvy buyer will have done homework and will have learn't about the common problems with the product and composed a list of important questions to ask, such as damp issues etc.
Phrasing the questions is important, for example:
Let us suppose the caravan is actually fully repaired and dry. If you asked "does the caravan have a damp problem?" The seller can accurately say "NO". But if you has ask "has the caravan any history of water ingress?" the seller would then have to disclose what they know about the caravans history. Don't forget they may genuinely not know everything, as previous owners can be just a cagey about some aspects of the truth.
You have to overcome economy of the truth. So knowing how to ask a question is very helpful.
A caravan is usually a major purchase for a family probably ranking third after house and car, so it makes sense to have an independent pre purchase survey carried out. This should highlight any history of damp, but also check its current condition. Generally if there is a history of damp I would suggest walking away from the deal, but on a practical note a caravan that has suffered water ingress and has been properly repaired may be a perfectly sound purchase. So a history of damp is not always a deal breaker, but it should at least be a deal modifier, because a caravan with a history of damp does have a reduced value, so you should get a reduction in purchase cost.
As you point out in one of your replies, the dealer is doing a thorough survey of your van, and you can bet if they find anything wrong, they will reduce their trade in price offer - so you have to be as thorough and ruthless as they are.
Best of luck.