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Moisture and vapor barriers are two different things that serve a similar purpose: preventing mold from rotting out building materials. The purpose of vapor barriers is to prevent condensation inside an exterior, non-basement wall. Cold air holds less moisture than warm air. In winter, as the warm, moist indoor air changes temperature inside the walls to the outdoor temperature, the water vapor could condense inside the insulation, creating mold. Thus, the vapor barrier between the wall surface and the insulation keeps the moist water vapor inside the room, away from the insulation.
However, in basements, the outdoor surface rarely gets that cold so as to create such a difference. (Some disagree, but that's my opinion). Moreover, the problem in basements is often not moisture from indoor air creeping into the walls and condensing, but moisture from the soil outside the foundation wall creeping in. I thus suggest not using a vapor barrier in a basement and instead using a moisture barrier on the foundation walls to prevent water from seeping IN.
Keep in mind two things. First, you do not want to trap moisture. One side of the insulation should be able to "breathe" to allow any water that accidentally DOES get in there to eventually evaporate. (With the correct barrier, the water should not be replentished and presumably will be a one-time thing.) You want to make sure there is no way that the humidity of the air in the insulation is higher than BOTH the indoor and outdoor air. If you have sealed the wall from moisture, then do not put a vapor barrier on the insulation. If the insulation comes with a vapor barrier, remove it or face the vapor barrier toward the exterior, not the interior. You might want to add a 6 mil sheet of plastic between the wall and insulation as an additional moisture barrier because it will last longer than the waterproof paint.
As for mositure in a basement from the exterior, the threat is often exaggerated unless your basement lies under the water table. The water "wants" to go down with gravity, not sideways into your basement. If your wall is pourous, then it will create a path of less resistance from the soil and moisture will seep in. But the slight barrier that you have done will make the water travel through the soil downward with gravity. You need not fortify your wall like a pool.
The foam insulation is for insulation, not water or vapor protection. Indeed, it needs protection from vapor condenscing in it as the temperature changes insides the insulation to cross the dewpoint and potentially condense water inside the foam.
[This message has been edited by Lawrence (edited April 11, 2003).]