If the hardboard is flaking, you have a problem with water seepage. It is imperative that you seal the hardboard thoroughly to prevent any water from entering. Wash the wall thoroughly with trisodium phosphate (TSP) or bleach. Many people use dishwasher soap to clean walls before painting. This is a big mistake because there are skin softeners added to dish-washing soap to help keep the dishwashers' hands soft. That same moisturizer will prevent paint from attaching itself to the wall. After cleaning the surface, apply two or three coats of sealer, paying special attention to the edges which are more vulnerable to water damage. Apply a coat of primer paint, and then either an exterior latex or an exterior acrylic paint will finish the job. Remember that hardboard is a pressed paper product that will not last forever. You will eventually have to change the siding.