I'm also a fan is making older rigid MTBs into urban/suburban/trail do anything bikes. They are perfect for it. You can get one with a DB steel frame in decent shape(meaning no dents, but plenty of scratches) for $150-$200. The Trek 930/950/970 etc come to mind.Nice True temper DB frames decent LX components.
Same story with your Diamondback- I had one a while back-roughly the same vintage as your bike, but it had a Splatter Paint Job. I don't know how many years the Splatter paint was in favor-had an Asian Paramount MTB with the same sort of paint.

The only things I change is the tires,and if the tires are heavily lugged, I'll just shave the lugs a bit rather than spending $30 on new tires.This also allows you to stuff a bigger tire in there also, but you already have big tires on your bike. I also put bars with more rise and more pullback on them, but that is because I have a gimpy neck.

For your bike, just clean it up and ride. I would be tempted to go with more all around suitable tires-maybe Nanorapters 2.1.and put 60 psi in them.Just depends on whether you will be riding on grass or just the street. You could shave the lugs on your current tires.
Luck
Charlie
PS- It was also a green-fluorescent green with white splatter, maybe black splatter also.It was a goiod bike, but too big for me-same story on the Splatter Paramount-good but too big.