moisture barrier

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The primary vapor would be on the inside wall either as faced insulation or plastic under the drywall. You still need a moisture barrier to stop incidental water from entering from the outside and protect the T-111. I like Tyvek because it doesn't tear, but it would be less expensive to use 15# asphalt felt (start at the bottom and lap as you go up.

There is a great installation guide on the web at
http://www.vinylsiding.org/install/guide.pdf