A stud wall is built such that it’s an inch or two away from the concrete. In this case only fiberglass insulation is installed between studs (no plastic on concrete). A vapor barrier is installed, then drywall. This situation is really bad, water vapor from the concrete escapes into th...
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If you frame a 2×4 wall from floor to ceiling I’d leave all the existing insulation in place. If you’re going to step the wall then you should remove the foil faced, install a vapor barrier (6 mil poly) over the stud cavity insulation, then you can install your drywall directly ...