sorry forgot to add if you fully paint the outside with bitumin that should keep it watertight.
With regards to the inside you could dryline the walls with plasterboard ,but make sure you leave a 50mm gap from the floor to stop moisture rising up.You can hide the gap by gripfilling the skirting in place
A garden room will not of itself create any water vapour.
Water vapour/condensation will only become a problem, it you boil kettles or take baths in the room. Other than that, the source will be the breath and sweat of the people using the room. Unless you pack the room with people, the water vapour will merely sink into the walls and disappear into the sky.
However, if you place a waterproof insulation or coating on the outside, then the water vapour will be trapped inside the wall, this will do no harm except to make the wall cold.
The way to proceed is to place a waterproof membrane on the inside of the room, to keep the very small amount of water vapour in the room and to encourage it to disappear by opening a window or door.
The insulation can then be placed on the outside of the walls.