I've been researching this of late for my own project. I'll describe what seems to be the best practices. Use 1" to 2" XPS on the floors. Use tongue and groove or shiplapped sheets and tape all joints. Leave a 1/4" gap at the walls and fill with expanding foam. Cover with 1/2", 5/8", or 2 sheets of 1/2" plywood tapconned through the XPS to the floor. I'm not convinced DriCore or Delta-FL are better products as they do not create an air barrier at the floor to prevent condensation and the ensuing mold and mildew. They try to mitigate this by telling you to install floor vents and to keep the humidity low with a dehumidifier. For the rim joists, tightly fit XPS in the cavity and caulk, foam, or tape into place to create an air barrier. Fill the rest of the cavity with batt insulation. For the walls, glue 1" to 2" XPS to the walls wrapping the top of the masonry wall. Foam any gaps, tape all seams and the top and bottoms thoroughly to prevent any air from getting behing the panels. Frame your wall against the XPS. Nail top plate to the joists and tapcon or shoot the sill plate to your insulated floor. No pressure treated wood is required since only XPS should be touching the masonry. Set your studs 16" on center between the plates. Install electric and plumbing. Fill between studs with unfaced batts if appropriate for your climate. Batts may not be necessary if 2" XPS is used on walls. Sheetrock the wall with a 1/2" gap between bottom of sheetrock and floor. I would use mold resistant sheetrock, this is exactly the type of situation that it is designed for. I wouldn't waterproof the walls. Moisture needs to migrate inward from the concrete, especially if you have an exterior waterproofing already. Moisture wicked up from the footers or other areas needs to go somewhere. Water vapor will migrate through the XPS, unfaced insulation, and sheetrock as it should. Problems occur when you trap moisture into the concrete wall with waterproofing or you trap moisture into your finished wall with vapor barriers.

Did the builder size the HVAC unit currently servicing the main level so that it could accomodate the basement? if so, adding the duct work for the basement is not a big deal. Post some details on what size units you currently have for each level and the sq footage. In my first home, they did no duct work in the basement but they did size the heater and AC unit to accomodate the basement living space. I acted as my own general contractor when I finished the beasment and I paid an HVAC company $1200 (this was in 1998) to add in ducts & registers in the basement. I did not add a seperate zone down there but could have easily done it for not much more. The basement was mostly below grade and worked fine running off the tstat on the main level. One thing you should get right now is a humidistat (costs about $20) and measure the humidity in your basement. With tighly sealed and insulated houses, moisture can be a big issue in the basement and lead to musty smells or mould. You might find that a dehumidifier is a worthwile investment when you finish your basemenent. I just added a large dehumidifier made by Sante Fe in my basement (currently mostly unfisished with some HVAC ducts) and it not only controls the humidity in the the basement, but we get the effects of drier air on the main level as well. This fixed a musty smell that my wife detected soon after we moved in, and then mildew spots we found on the basement cement floor when we had temperatures that were in the low 70's but humidity around 80% - very damp. Best of luck.

Absolutely NORMAL! The age of the house = expensive to put flooring in the basement. Age of the house = expensive to fix all the problems you have run into. The problems you have = EXTRA expensive to install a floor that will survive standing water. Sorry but your situation = very expensive. There is no getting around it. And if you think loose lay are expensive, wait until you see the cost of glue down vinyl! The choices are: 1. Go SUPER expensive; do ALL the preparation NEEDED (that includes the $5/sf moisture mitigation for the slab AND the foundation walls); add more concrete and then lay any floor you want so that you no longer have any concerns. Go SUPER CHEAP = couldn't care less if the floor gets ruined. You simply buy a new one and keep going. Option #1 will cost 3-7 TIMES more expensive than option #2. That means you can replace the SUPER cheap floor 3-7 TIMES before you "hit" the price tag for the "FULL FIX". If loose lay vinyl is getting too pricey, then I would say option #2 just became your best friend.

Interesting thread. This was the house I lived in from age 10-18 with my parents and 3 siblings. Eventually my dad left so then it was "just" the 5 of us. And no, he didn't leave because of the size of the house. 960 s.f., 3 bdrms, 1 bath. And we were THRILLED when we moved there from our 2 bedroom apartment. We even had a yard! No garage at the time but my brother eventually built one for my mom (some kit thing). I had my own room (crazy) as the rooms were so small my mom thought it too difficult to cram my 2 younger sisters in with me. My brother slept on the pull out couch. I remember in high school when a visiting choir was coming to town we hosted 4 boys at our house (sleeping bags on floor). And when my grand parents came to visit they often stayed with us rather than my cousins who had HUGE homes. I also remember hosting friends (all of whom had much larger, nicer homes), including boyfriends who would visit after dates, etc. and we would sit at the kitchen table talking (or kissing on the couch after my brother moved out) until the cuckoo clock gave us away at midnight. My mom could hear the cuckoo clock of course since every door opened to the living room and kitchen. She would lean over her bed and open her door and mimic the cuckoo clock if she needed to. We had a small mechanical room off the kitchen where we eventually put a portable washing machine (yippee!) but you had to manually stay with it and run each cycle. Clothes on the outdoor line, even in the winter in MN, or off to the laundry mat. It was a standard joke to literally run to the bathroom if my brother mentioned he was going to take a bath (we didn't have a shower) because we knew he would hog the bath for awhile. Funny, I don't remember feeling anything but lucky to have a home and a family to share it with. All the kids got themselves through college and on in life just fine. All of us have larger homes now because we can and choose to. But we know we don't NEED it! So of course it can be done. Millions in this country and elsewhere would love to have a 1000 s.f. house for their family. Maybe they just aren't hanging out on HOUZZ trying to figure out their decorating style.