What flooring are you planning to use in this room?

Right, you have a few options.

Firstly I don’t think the cracks sound like anything to worry about. No decent tiler would lay tiles directly onto concrete these days as they are so prone to cracking.

I’m just coming up with a few ideas as only you can judge the conditions as you move on with the job.

So, if you want to lay tiles I would recommend using one of the tile backer systems, normally a plastic mesh, but there are other systems. Because of the height issues you will probably have to remove the tiles, then you could possibly use a self levelling compound rather than dig out all the screed before putting the backer down.

If you want to add insulation then you would need to dig out all the screed. If it’s soft it will come up easily with an SDS breaker. If it’s really hard I would go back to previous plan and tile. Once you have the screed out, unless the floor is flat and smooth, level the floor with self levelling screed. Once completely dry use 25mm roofing laths all round the perimeter and lay a few across the room. Fill  between with 25mm foil sided insulation boards then lay a damp proof membrane over the whole floor and ideally up behind the skirting. You can then put t&g chipboard, loose layed, on top glueing all the joints and leaving 10mm round the edge. There are different thicknesses of chipboard so you can pick one to give you your required height. This gives you a perfectly flat floor on which to lay a vinyl plank type flooring.

So, if you count a few mm for levelling screed, 25 for insulation, 22 for t&g and 6mm for flooring you are just below your 60mm max.

Hope that helps. I’ve fitted insulation like this on my own home and it makes quite a difference to the comfort levels in the room.

45-50mm is normal thickness for a screed and screeds often crack especially if they dried too quickly. Under most flooring it doesn’t matter but that’s not the case with tiles which is why they have developed various methods of decoupling the tiles from the screed. If it’s coming up really cleanly then that’s a bonus if you want to go down the insulated floor route.

Best of luck, much better to do it yourself then you know it’s done properly.