How tall is this attic space? How large are the joists in the "floor" area and what spacing do they have? How deep are the roof rafters and what are their spacing? What is the current attic ventilation? How would you plan to access the space with a stairway? There are certain minimum height requirements for living space, and the requirements for supporting live loads differ from those of just storage. Stairways have to have a certain rise and length for the height involved and eat up a lot of space. Where do you envision that space to come from on the second floor? Your project may be more involved than you think, or completely undoable depending on those factors. You need a site visit from a structural engineer, architect, and contractor to determine if what you want will even be doable. In the meantime, plain (not architectural) asphalt shingles are a fairly cheap item and well within most DIYers ability to install. Which means that they can be considered sacrifice at a later date if your other plans come to fruition. But, you need to take steps to protect your home from leaks, so needing a roof trumps all of the other "what ifs". As far as the ductwork goes, rigid ducting is far superior to flex duct. There is no need to replace it at all. Just make sure that the transitions are properly sealed and add additional insulation if you desire.

You are on the right track in determining where to locate your thermal barrier. if you didn't want to use these spaces you would insulate and seal the knee walls and floor (sorry..a & c )and make that the thermal barrier. Since you want to use the floor space then you have to move the thermal barrier to the roofline. I can see that you would need to insulate c..and think that this has to do with some of the comfort issues. that you can not access c makes it more of an issue. Even if you used spray foam insulation @ R-7 per inch you would still need 7" to achieve R-49. Do you have framing that will allow that? The benefit to spray foam is that there will be no air movement, and less will perform better than the full amount of fiber glass batts..follow me? So possibly you could get away with less than 7". I would take up sections of the floor and see what you have to work with. You could cut out sections and replace it with same size plywood. Then you would know how to proceed from there. Have you thought about products for diy like tiger foam? I've seen 2 part mixes for sale online. for approx 150 sq ft one set should do you. The benefit to foams is that they eliminate air movement. Most insulation does not preform due to air movement through the insulation. There are climate specific issues with vapor barriers for cold climates that I am not well versed in, it would be for others with that background to help out with. I'm curious about the fiberglass batts on the roofline. We don't do that here.. And the 5" gap..can you see the underside of the roof decking? Is the insulation dirty on either side of this gap? And one last thing..you could make an attic hatch to take a peek at the attic space above the rooms. Start with the cutting of the floor in those attic spaces and graduate up! Best of luck. You seem determined to get this right, and there are some very knowledgeable people here.

Thanks for all the help guys. We had the big box store come out on a whim just to get an idea of the cost and sq ft that would be needed in case we decided to add insulation ourselves. We were NOT wanting to have them put new insulation on top of the old since is was full of dirt and debris regardless if it were blown in or batt. We have unfaced insulation on the attic floor, not sure what the vertical install on the outside walls are. We are taking the good advice given and will be looking into getting a reputable insulation company come to give an estimate soon. The gable vents were put in after the 15yr old roof failed so we are a little more optimistic that this recent roofing job will last longer than the last one.

So we just finished the second year in our house and both years we had some pretty cent sized ice dams, I haven't noticed any damage and I'd like to keep it that way. Our house is a story and a half cape built in the 50's with 2X6 rafter and vaulted ceilings upstairs. Additionally there are no soffit vents or really any place to put them with our very limited roof overhangs. There are a three ridge vents (one at each end and one in a large dormer with an attic fan). Currently there are fiberglass batts up there, with a small amount of airspace in the vaulted sections but I think for the most part air is being restricted. The knee-walls are insulated with the space outside them having insulation in the first floor ceiling. I took a picture just after some light snow that I think gives you a pretty good idea of how ugly the current insulation situation is. My eventual vision is that when we replace the roof (hopefully still a few years off) we would put some additional foam over the existing deck, leave an airspace and a new deck over that and vent the soffit. However I am wondering what can be done more in the sort term. The second floor is "finished" with wood paneling that we would like to pull out and install Sheetrock and if we are going to try to insulate it would seem like this would be the time. I would prefer something that we can do ourselves (leaning towards XPS sealed with canned foam). With the future plans I would think trying to seal the attic space would make the most sense however with only 2X6's for rafters that does not give a lot of space for insulation (without adding depth and lowering the ceilings which we would like to avoid because it's low as it is). Would it make sense to put as much XPS up there as we can but keep an airspace (4-4.5" of XPS)?