Thanks for replying, Hube, I live on Long Island. Right now there is Owens Corning R-11 fiberglass insulation, 3.5". The wood studs were put up about 1 or 2 inches away from the wall. I did say there was no moisture down there but I did notice a white powder in one corner of the basement when I ripped up the carpet, which might be salt deposit? I'm thinking I should rip everything down and start from scratch.
In reading about it online, it seems like the pink foam board might be the way to go. Foamular 250 from Owens Corning seems to be the most popular, just not sure what thickness to get. And there seems to be a couple of different ways to install it, glue the boards to the wall, screw ferring strips in the channel where the seams are and sheetrock over it. Or glue the boards to the wall and just frame in front of the boards. And they say a vapor barrier is not needed. Not sure what to do.
Also, there is about 2 or 3 feet of my basement walls that are above grade (I guess that means above ground) and the rest is below grade. I would obviously insulate all the way up, but do I have to worry about moisture in the areas of the wall that are above grade?
Any advice would be helpful.