The batt insulation should be set in place, not smashed into a space; and yes any insulation should always be dry.

You need to 1. figure out where the water is coming from-- is it condensation or a leak in the roof, 2. replace the insulation after correcting the condition that led to its getting wet. It might be insufficient insulation combined with an imperfect vapor barrier and/or improper venting of the roof. if it was cold outside while you were adding a ton of moisture to the air from plaster work you could have a condensing surface above the insulation.

With properly applied and sealed zipwall here should be no problem with plastering before the siding goes on.

A 3 season porch isn’t usually insulated. You will continue to have moisture issues without deciding if it’s interior or exterior space and constructing it accordingly.

I am really sorry that someone ignored common sense and simply hung drywall over that. That is a failure of both the subcontractor and the GC to not have the oversight in place.

I believe the water issue was caused by melting trapped snow on the main house roof. They shingled the porch roof and insulated and a warm up followed. The snow melted into the porch ceiling area. The porch has HVAC. Supposedly the GC is ripping down the ceiling and opening up the walls to remedy the situation. Fingers crossed.XXX

I'm concerned about the use of Zipwall and poly vapor barrier. Any moisture that gets in these walls has nowhere to go.

Here's a link to the best article I've read about moisture. The Perfect Wall by Building Science Corporation

This raises concerns about your builder overall. The way the insulation is done in the wall, sheeting over wet insulation, poly vapor barrier with zip wall, ...

My understanding is that a zip system should be fairly weatherproof so leakage might indicate improper installation. As mentioned above, I think you are not supposed to use an interior vapor barrier with it or you'll end up with trapped moisture and mold.

More on zip: http://www.greenbuildingadvisor.com/blogs/dept/guest-blogs/zip-sheathing-tips

At a minimum I'd hire a good inspector to look over things to make sure you're getting a well built house.

I'll echo what Mark said, the wall insulation was not installed properly. It should be cut to fit perfectly and fill the space, not jammed and scrunched and folded in which will significantly reduce its effectiveness.