Options for repairing/replacing moldy basement insulation and framing?

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New Member
Sep 10, 2023
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I have a utility closet in the basement of my townhouse. Due to two separate water issues, both now resolved, I have slightly moldy insulation and a rotten baseplate on the back wall of the closet, which is actually at the front of my house. I've pulled down some of the insulation batts to check on their condition, and as you can see in the first picture, they were right up against the exterior cinder block wall. Also note the main water line, main shutoff valve, and a valve for the front hose bib, and the fact that there was no insulation around these. (i.e. I didn't rip that part out; it was never there at least as long as I've been here)

In the second picture you can see that this closet only has framing and insulation on the back wall and a few feet of the side. The remainder of the side wall is the wall that divides my house from the adjoining unit. (The adjoining unit is set back a few feet, so actually I guess the framed portion is all exterior).

The third picture shows the rotten baseplate.

My questions:

1. Am I right to think that fiberglass batts are a bad choice here given that they're right up against the cinderblocks and prone to get moldy even if I don't have leaks?

2. Is there any way to switch to foam board insulation without taking down all the framing? Or is the best approach here just to tear out everything and start from a bare concrete wall? Was hoping I could just replace the baseplate and sister one or two damaged studs.

3. How bad an idea is it to just replace the moldy batts, put up some drywall, and call it a day?

3. Am I going to need to (or should I say "get to?") take out the drop ceiling to do any of this? (And yes, the leak that caused the stain on the tile is fixed).