As to which space to use: I have to have lots of good light. I have S.A.D.D. and light is very important during any time of the year. I had the basement at out old home and found I was hardly ever down there even tho the lighting was really good it was florescent(sp).
Here, I have a lovely picture window that looks out to the chickens, barn, and woods. I placed my machine so my back is to the window. I tend to do too much daydreaming, bird-watching, and critter-watching when looking out the window.
I don't like people walking through my area when I am working, so it is in the corner of the Great room. Make a path for DH to follow going to his shop. Can any odors, dust, or anything else not wanted on/in/near your fabrics come out of his shop? ie: paint, thinner, wood shavings, etc.
Unless the walls were primed with a primer that has a mildew / moisture / odor resistant barrier, you may still have the problem's.
Running back and forth from upstairs to downstairs could get really old.
As to the plastic bins in the basement, just take a small drill bit in the drill and drill a bunch of tiny holes in the top and a few around the upper sides. That way the fabric can breath. My DD has two bins we used for something else like this for some of her fabric.
Since your floor is concrete, it will be cold and hold moisture, too. Prime it before putting anything down.
Good luck.