The linoleum is a recognized moisture barrier. The underlayment for engineered flooring will have a moisture barrier included in it's construction, or the manufacturer will recommend a 6 mill plastic film in installation instructions. My favorite filler for low areas is to use roll roofing, or the three tab asphalt roof material to add height to the low spot. This can be done as you are laying the flooring because there will be no time to wait for latex underlayment that is self leveling to dry. You use a straight-edge long enough to cross the low spot to see how many layers of the tarpaper to add like what will look like a contour map. Instructions with the flooring will say that you need to be within an eighth of and inch, and the tarpaper is an eighth inch thick. I use small full thickness pieces to make marks on the floor with a sharpie where each layer will go. Use the small pieces to check where the boundary of each layer ends. Make marks for 3 layers, then where is is not so bad, 2 layers, then one layer until you have the plan. After all the layers have been marked, start filling the deepest layer first, overlapping each layer with what it takes to make your fill within the eighth inch specifications. I keep each layer in place with some tape. I like to add some water-proof paper over the whole patch to help the edges of the contour even out. Aqua-Bar Kraft paper is tough and helps the flooring "bridge" the unevenness between one layer and another just in case a butt-joint happens to fall right where two layers meet. The T&G of the flooring will keep everything in alignment, but for square-edge flooring like 5/16th inch thick top-nailed flooring like we use here in San Jose I prefer to top the patch off with Kraft.
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