Your climate, which you haven't included, bears on how you insulate a wall. Figuring you're north of the Mason-Dixon line, above grade, I'd scrap the mouldy fg, leave off the vapour barrier and use a higher R-Value per thickness more moisture resistant material. For the below grade wall, use XPS, EPS or spray polyurethane foam by themselves, or in conjunction with fg batts.

That mess on the plates (caulking over fg) could be scraped out to provide a base for polyurethane hand-held foam, such as Great Stuff. Also, remove the fg between the joists and fill with spray foam or with foam boards and caulk the edges. Yes, there should have been a gasket. There may even be one there; gaskets on a poured wall are usually not enough as poured concrete does not settle evenly.

Here is a link that might be useful: Building Science Corp. on Basements

Sorry, I should have mentioned we live in northern Illinois. When you say replace the fg with foam boards, you mean XPS or EPS boards?

Would the same approach (XPS or EPS board + caulk/foam) be appropriate for the joist band? It's currently packed with cut-to-size fg bat.

Thanks for your help. One more question (for now--I'm still doing a lot of research on this!):

The exterior wall is framed with 2x6's, so there's still 3 1/2" of depth in the stud bays after putting in 2" of XPS. On top of that, the concrete wall is 3 1/2" wider than the framed wall. And in addition, I plan to do a layer of rigid foam on the inside of the concrete wall. What do I do with the 9" of space between the rigid foam in the exterior stud bays and the 2x4 interior wall?

(Exterior wall)(2"foam)(3.5" left in stud bay)(3.5" air over concrete wall)(2" air over foam on concrete)(2x4 interior wall)

Two inches of XPS by itself is inadequate insulation for either the below or abovegrade portion of the basement wall.

This calculator from the US Department of Energy shows recommended insulation levels by Zip Code.

Or you can follow the "10, 20, 40, 60" rule of thumb for R Values of Dr. Joe Lstiburek of Building Science Corp.. If once you reach the required R Value there's still empty space behind the drywall, you can leave it that way or add more insulation.

You might consider this: Remove the 2x4s from the concrete wall, then glue (PL300) or mechanically fasten the 2" XPS onto the concrete wall. Then run 2x4s on the flat from floor to ceiling. The electrical boxes can be blocked out 2" or just laid over the XPS board and thru-screwed to the concrete to hold them in place. Install netting over the above-concrete portion of the new inner wall, and blow dense-packed cellulose in the now very wide framed cavity. You also could lay another FG batt (R30) horizontally over the outer 2x6 framed wall to fill the cavity, and cover that with housewrap sealed carefully on the perimeter against air leakage. You want an air barrier next to batts on all six sides, so that there aren't any open cavities right next to the batts. Finally, sheetrock over the new inner wall, tape the joints, and use vapor retarder primer paint (0.5 perm). Leave out the polyethylene sheet that is there now.

You mentioned condensation on the outside of the poly sheet in summer. The scenario I envision is high outside humidity, with dew point in the low 70s, diffusing into the cavity and condensing on the poly, because the inside temperature is cooler than the dew point. The humidity has no place to go, certainly not through that vapor barrier. It runs down the poly and is absorbed by the wood, giving rise to mold and rot conditions.

Increasingly, use of polyethylene sheets as an interior vapor barrier is frowned on except in extremely cold climates. It prevents any drying to the interior when conditions require it. Especially if the exterior is brick or similar water-retentive cladding, poly gets you into trouble. What is needed is a low-perm vapor retarder (1 perm), which slows down outward diffusion in winter adequately, while allowing slow drying to the interior when needed, typically in summer.

If you don't want to add more FG insulation over the R19 presently in the wall, at least replace the poly with housewrap, and seal it well all around the framing. It's an air barrier, but water vapor will diffuse readily through it. Your framing of the new interior wall will have to be sealed well against air leakage on all sides. Especially at the top, under the ceiling, you need continuous air barrier and vapor retarder layers. You could use a strip of polyethylene under the floor joists, sealed to the top of the exterior 2x6 frame and to the top of the new interior 2x4 frame. That would be both an air barrier for the top of the cavity and vapor retarder (barrier in this case) against winter outward moisture migration. Its area is small enough relative to that of the framed wall that it wouldn't really interfere with inward drying in the summer.

Cellulose over foam is an excellent alternative.

Housewrap is designed as an air barrier and drainage plane behind wall sheathing. By the time you get to the finish wall in a basement, the air barrier function should have been fulfilled by the basement wall and rim caulked, foamed and insulated. What the housewrap will do is make it difficult for water that gets inside the wall--from bulk water leaks for instance-- to move to the inside of the basement. It moves by diffusion, a weak force.

Fibrous insulation in basement walls and rim joists is an invitation to mould. Wrapping it in housewrap doesn't help.

My suggestion about using housewrap on the inside of a batt was to ensure contact with an air barrier material on all six sides, the sixth in this case being the inside face of either the batt already in place (with a 9" space to sheetrock) or the R30 added batt (with a 1.5" space to sheetrock; and I should have said R19, not R30), both in the case where he builds a flat interior wall from floor to ceiling. Any sheet good, flexible or stiff, against the batt face would do, as long as it isn't totally impermeable like polyethylene.

Of course he could skip extending the 2x6 wall and just have a 7" shelf on top of the covered concrete wall. In that case, the batt on the 2x6 wall will be right up against the sheetrock, and he still ought to skip the poly sheet over the batt in favor of vapor retarder primer on the sheetrock.

If there should be some situation resulting in liquid water getting into the wall cavity, polyethylene, housewrap, or even the sheetrock tightly installed against the framing will retard the free flow of the liquid out into the room. Liquid water has no business being in a wall cavity, and the outside should be detailed so that water in the cavity does not occur with any regularity. The wall should be designed to permit slow drying in at least one direction when a really unusual event does occur. No wall need be designed to leak liquid water from the cavity to the inside.

When I wrote "If once you reach the required R Value there's still empty space behind the drywall, you can leave it that way or add more insulation", I was thinking of the basements that I've done with sprayed foam on the foundation behind stud walls.

Fibrous insulation would, of course, need something to prevent it from falling down. Netting with cellulose, for instance.

And as long as there is sufficient foamboard/foam on the foundation wall to keep the concrete from becoming a condensing surface, polyethylene to the interior won't cause problems, according to Building Science Corp. (Until recently, I was required by inspectors to have it as a so-called vapour barrier.)

However, adding fg to the existing fg will be a mould factory no matter what it's wrapped in. The exception would be a smart vapour barrier, such as MemBrain used to the interior wall.

There's always the danger of water ending up in the fibrous material from bulk water sources, everything from too vigorous landscape watering to cracked foundation, burst pipes and overflowing washing machines above.

Thanks for all your suggestions. I think this is what I'm going to do:

1) 2" XPE in stud bays of exterior wall and joist band.
1.1) R13 to fill the remaining space in the exterior stud bays and joist band.
2) 2" XPE on all concrete walls
3) expanding foam along all edges and cracks. The housewrap isn't doing a very good job of preventing air infiltration on this wall right now.
4 option A) 2x4 wall only half-way up, leave a ledge, and insulate with R13 (3 1/2") fiberglass bat in exterior stud bays (upper) and 2x4 interior (lower) wall.
4 option B) 2x4 wall straight up, R13 in interior wall, blow-in cellulose for the big void between interior and exterior walls. Retain cellulose with netting or block it in with additional XPE.
5) I also plan to insulate the space between the floor joists with batt insulation.

DickRNH--you mention putting in a vapor barrier from the top of the 2x4 wall to the top of the exterior 2x6 wall. Can you help me understand which direction it is intended to block water vapor?

worthy--funny you should mention leaks from foundation cracks. I was in the basement yesterday and noticed a draft coming through the *concrete*. Upon closer inspection, I noticed a (thankfully just a shrinkage) crack in the foundation wall, with air blowing through it. And it has allowed water through in the past, as I found a small spot of mold on the concrete near the floor. I'll be fixing that before making any more progress on the insulation, methinks :) I think by the time I'm done I'll be able to write a book about all the things that were wrong in this basement.

Just one oversight:

5) I also plan to insulate the space between the floor joists with batt insulation.

If this is at the top of the wall, it's called the rim joist and fibrous insulation will do nothing to stop condensation in that area. Instead, the condensation will feed mould growth in the fiberglass. Please see link below for various solutions.

Sprayfoaming rim joist area seals air leaks and keeps the
area warm preventing condensation in winter. Photo: Building Science.Com.

**
Polyurethane injection works best in the shrinkage cracks.

Here is a link that might be useful: Building Science Corp. on Rim Joists

I was trying to envision what the top of the extended framing cavity would look like in the case of running the inner 2x4 stud wall from floor to ceiling. If that cavity is filled with a porous insulation (FG batts), where is the air barrier at the top of the wall. It wouldn't do to have outside air leakage pass up through the cavity insulation and pour over the top through the joists and into the room. Similarly, there would be a need for retarding water vapor diffusion from the room back out the same path at other times.

The air barrier must be continuous. If it is established at the sheetrock side of the cavity for the framed part of the wall, then what happens at the top of the wall? That's why I suggested a simple narrow sheet of poly, sealed (not just stapled) to the top plate of the outer 2x6 wall and also sealed to the top plate of the inner 2x4 wall. Following ADA techniques, the sheetrock would be sealed to the top of the inner frame as well, if you are going that route.

@worthy--I plan to put in XPS+expanding foam in the rim joists. The FG would be for sound deadening between the floors more than anything.

@DickRNH--All of the stud bays and rim joist/joist band would be sealed up with XPS+expanding foam, which should provide a sufficient air barrier for the entire wall. In that case, do I still need a separate vapor retarder?

do I still need a separate vapor retarder?

Not according to Building Science Corp. (See Figure 3)

The foam is either semi-permeable or semi-impermeable.

****
fg in the joist space will do next to nothing to reduce the sound from impacts or other sources.

fg in the joist space will do next to nothing to reduce the sound from impacts or other sources.

What do you recommend for improving noise isolation between the floors?

There are lots of threads on this separate topic.

To give you some idea of how to proceed, here are some examples of sound attenuating constructions. The major additional methods would substitute Green Glue or sound attenuated drywall such as Quiet Rock for the resilient hangers.

Source: SoundSmart, City of Vancouver Noise Control Manual, prepared by Wakefield Acoustics Ltd., Victoria, B.C.

This week, I cut and installed 2" XPE in all the stud bays, and I found out in the process that the air barrier on the outside of the house is not effective, at least for the bottom portion of the wall. Many of the stud bays had a noticeable draft coming through them, and the area with the worst mold had an unsealed outlet box--you should have felt the draft coming through that one!

I think that the air which was penetrating the wall is the likely culprit for the surface mold I found on the vapor barrier. With those leaks sealed, I'm starting to think I should insulate the above-ground framed wall like a regular exterior wall--fill the remaining space in the stud bays with 3 1/2" fiberglass, install a poly vapor barrier, and drywall it over. On the bottom half of the wall (where there's concrete), I'll do the 2" foam plus a half-height wall insulated with R-13/15 fiberglass and no vapor barrier. I'll end up with a 9" deep ledge, which is no problem for me.

Thoughts?

I think that the air which was penetrating the wall is the likely culprit for the surface mold I found on the vapor barrier.

Not the air, but the moisture in the air. The optimum fix would be to install a proper air barrier to the exterior.

If that's impossible, install moisture resistant insulation as tightly as possible followed by drywall and latex paint. The vapour barrier to the interior in a cold climate--which is in fact a hot climate, dominated by air conditioning in the summer--will not enable the wall to dry to the interior. Furthermore, the vapour drive--always hot to cold--will accumulate moisture in the wall behind the vapour barrier.

See the Building Science link below for the wall section that matches your home's construction.

Adhering to the gospel of six mil polyethylene will not save you.

Here is a link that might be useful: Buidling Science Corp.

So your recommendation is to install vapor retarders in the exterior wall rather than vapor barriers?