Hi Wiz,No matter how many coats of paint you put on the stain it will still bleed through, and PVA wont touch it.
What you have to do is to get some oilbase undercoat, it must be oilbase,you could use eggshell, as long as its a matt type finish, and oilbase, but its better with UC, and paint that on every inch of the stain, even go a couple inches extra, when dry, either roll the stain area with a thinnish emulsion or use a brush.
When dry, then roll the whole wall.
You can either use UC, any old UC will do, preferably white, and it works out cheaper.
Or you can use alkali primer sealer which is very expensive, personally I would go with the UC, and add a bit of white spirit, so its not slapped on too thick.
I have used this method umpteen times and it never fails.
Your flaking paint problem..... I need a few more details before I can give you the proper advice.
Firstly, what finish was the existing paint?....
What are you putting on it, ie matt, silk, softsheen.
Did you dilute your first coat, or use straight from the can?
I dont think you will need the basecoat stuff, but like I said, I need a bit more info.