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I had some water damage in my laundry room. We had some water damage pros take care of any potential mold issues. But they were not very careful removing the baseboard, and the bottom 2-3 inches has large gouges down to the gypsum, and sections that have just broken off.

Can I use something like Rust-Oleum problem surface sealer to reseal and install new baseboard? Or should I cut the drywall out and reinstall? I want to prevent any mold regrowth since this is in a laundry room that can have higher than average humidity occasionally.

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If just the paper on the surface is broken you can fill the gouge and paint over it. If the sheetrock is broken and falling off it is better to cut a section out. I find the closest stud on either side and cut the sheetrock down the center of the studs, cut a new piece to fit and screw it in at the edges of the new piece and the original area cut off then tape & texture to match and repaint.

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