This is an excellent start. Rip 2X4 to 2X2, use to frame out and use drwall. Avoid vinyl wall paper on the surface of the drywall. Keep the %RH <50%RH with a adequate sized dehumidifier. It will be the nicest space in the house. You need 1 pint of capacity per 1sq.ft. of basement. Check EPA's "Energy Star" web site for size and efficiency. http://yosemite.epa.gov/estar/consumers.nsf/attachments/dehumid_prod.pdf/$File/dehumid_prod.pdf?OpenElement
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