combination construction question

I have an unusual situation (at least I think it's unusual). I am enclosing/finishing an attached garage, and replacing the garage door with a window. I have an 11-foot-wide U-shaped concrete block wall (16" wide blockwork on each side and 30" high blockwork in the center). I plan to construct a wood-framed wall in the center of the blockwork U to hold the window properly. I plan to put vinyl siding on the entire wall exterior, once I have the window in place. I plan to install 3/4"-thick firring strips to the block wall to hold the siding. My queston is this...
When constucting the wood-framed portion of the wall, do I need to build it so that it sticks out the additional 3/4", so that the wood wall is flush with the firring strips that are on the blockwork?

I would build the framed wall such that it is flush with the furring strips, instead of running furring strips up the outside of the framed wall. Doing so will give you sturdier nailing surfaces (unless your studs are at 48" centers!).

As an aside, how did you level the sloping garage floor?

Thanks BridgeMan.
I'm leveling the floor by building a new wood subfloor system on top of the concrete. By doing so, I'm also able to put a vapor barrier and insulation under the finished floor. The concrete garage floor isn't really sloped too much...at least not as much as I would have expected...but, the house was built in 1954.

Hope you are using pressure treated wood for the framing and a moisture barrier (foam?) underneath the plate to protect the wood. ALSO, you need to properly flash the bottom of the wall to ensure no moisture gets under the wood plate since you have no clearance between grade and the wall. (Usually, the siding stops above grade to prevent wicking)

Lastly, a garage conversion can require permits . . . or you can ignore the permit requirement and take your chances on re-sale.

It would be better to lay a row of block at the bottom with foundation bolts set in them, instead of trying to set the wall on the slab.
Your issues are going to be the siding setting to close to the ground, and water getting in under the wall.

Since I had to dig down to put in footings and a foundation across the old garage door's opening (there was neither), the new foundation blockwork that I built is actually what created the bottom of the U shaped wall opening to begin with. I had built the block wall up to approximately 18" above the garage floor level, so that there would be some foundation showing under the bottom of the finished siding, which I kept 8" above grade to match the rest of the house. Having the 18" high block wall also creates a very wide and somewhat deep window sill aspect inside the house (once the interior framing of the room is finished), which my wife really wanted.
I framed the wall to hold the actual window flush with the exterior of the blockwork, using pressure-treated materials (with foam sill sealers) against the block itself, and non-pt materials around the window. Once I sheathed the exterior with 3/4" plywood and installed the window, everything was flush with the remaining wall and ready for siding (which I finished installing yesterday). I still need to do some finish trim at the top of the wall (on the roof eave and fascia).
Everything worked out very easily, and it looks very nice (if I do say so myself). Thanks to everyone for the input and opinions. It's good to know that my thoughts on how this was to be done were right all along.

callmevilla~After previous exterior renovation projects had revealed water damage to the bottom of the house's sheathing, I wrapped the entire bottom edge of the sheathing (up about 6" high on the front and back sides) with two layers of tar paper, to eliminate any chances of the bottom of the sheathing getting wet.
They are carrying me out of this house feet-first in a long box! I have no worries about resale...that's for the heirs!!!