Answer: Based on your description I think you could make a lovely little garden if you use plants that like moist shade (or a damp, mossy glen.) Some plants to consider would include a variety of ferns and assorted hostas along with annual impatiens and tuberous begonias for all summer flowers. You could also plant a range of shade loving flowering perennials such as Asarum, Primula, Brunnera, Dicentra, Helleborus, and Tiarella. For additional accents you could use tropical houseplants outdoors for the summer such as Monstera philodendron, variegated ivies, asparagus fern, African violets and Sanseviera. You could also add a small evergreen shrub or two such as Aucuba or Sarcococca and possibly use a groundcover such as mondo grass or liriope or Vinca minor. Generally speaking, adding stones would not work to fix the drainage, what you would need to do is identify the source of the excess runoff water and redirect it. Also, anything you can do to improve air circulation through the area would help take care of the musty smell. I hope this gives you some ideas.
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