"The other posters are probably correct in that you will be doing extensive work on the corners and then re-priming and painting." I believe the posters are generally saying that the loose material will have to be sc****d off, patched and primed.
"No amount of pre-papering priming can compensate for the fact that the paint is just not stuck to the drywall." I indicated priming alone will not cure the problem, at least as far as getting wallpaper to adhere, and will not be of benefit in holding the paint down. Indeed, additional coats of water borne paint will, in the process of drying, probably aggrevate the poor bond of the original paint and break its already weak bond.