Apparently the waterline to the ice maker is freezing up, causing leakage and he could not figure out how to stop it. 

There is no evidence of water leakage and the seller is not aware of any.

It must've been pretty serious leakage to where filling the basement seemed the best option.

ALL local contractors window installs are subject to rot and leakage in a VERY short period of time. 

Can I not argue that it was more of an issue with the drain/leakage in the shower area that let water pass internally? 

They probably have other ways to test for a sewage leakage and may identify the smell as that or not.If you do not have either of these issues, look at the wood in the basement. 

The landlord is in violation of city code which states that "No basement may be used as a habitable room unless floors and walls are impervious to leakage of underground and surface run-off water."

The units are also up down so that is an issue for leakage that I would not want to take on.

The house has a few deferred maintenance issues which include no boots on the roof exhaust pipes that may cause water damage and also a chimney in disrepair that may cause CO leakage from the furnace.

There's also no signs of water leakage from the cracks.