Scrape off what's loose, run a bead of flexible filler-caulk around the hard edge the old paint left, flatten it with a scraper, and paint straight over — no sanding, no stripping the whole wall.
Strip the loose plaster, prime the exposed patch with PVA, then lay ready-mix filler on thick and slightly proud — and leave it alone. Overworking the trowel is the mistake; the sander fixes everything tomorrow.
