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Dry Can I build a dry room in a moist garage?

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Dry room in moist garage?

I have a garage that lies in sloped terrain with the back wall almost fully below ground level. The garage is very moist, probably because of water seeping through the walls and floor.

I would like to build a small metalworking shop in the back of the garage. The shop would need to be reasonably dry to avoid rust on equipment. I have thought about building the shop almost like a shed within the garage, with a few inches of air between the garage walls and floor and the shed. The shed will have to be insulated because of temperatures below freezing in the winter.

Is this at all possible without digging around the outside of the walls and fixing the drainage?