Is it okay to use horizontal furring strips over pink foam board?

The horizontal layout is definitely going to cause issues because those wood strips act like little shelves for moisture. If any water seeps through that block wall or if condensation forms, it's just going to sit on top of the wood and rot it out from the back. Since you've already had water issues, you really don't want any organic material touching that masonry.

The way you've got it set up right now creates a series of pockets that can't breathe or drain. In a basement, you want a **continuous thermal break**. By breaking up the foam with wood strips, you're creating thermal bridges where the cold from the block wall hits the wood directly. That is exactly where your condensation is going to happen. It's basically a recipe for mold growth behind your new drywall in a few years. If you want to do this right and only do it once, you should pull those strips down. The standard move is to glue the rigid foam directly to the block wall in full sheets, taping all the seams with high-quality waterproof tape. This creates an airtight vapor barrier. Then, you build your 2x4 stud wall or install your furring strips on top of the foam. That way, the wood never touches the concrete, and the foam layer stays uninterrupted.

And if you're worried about losing floor space and don't want a full 2x4 wall, you can use **Tapcons** to secure vertical furring strips through the foam and into the block. But definitely keep them vertical. That allows for potential drainage, though the continuous foam layer is what really protects you. It keeps the warm, humid indoor air from hitting the cold concrete and turning into liquid.

Agreed, the continuous break is the only way to go. If you don't keep that foam layer solid, you're just inviting condensation to hit those cold blocks. One little detail to watch for if you switch to the glue-down method is the type of adhesive you buy. You have to use foam-specific stuff like Loctite PL 300; the standard solvent-based construction adhesives will literally melt holes in that pink board before it even cures. Also, even with vertical strips, make sure you leave about a half-inch gap between the bottom of the wood and the concrete floor. It prevents the wood from wicking up any moisture that might migrate across the slab.

Listen, if you’re running Owens Corning Foamular 250, make sure you’re using 3M 8067 or Siga Wigluv on the seams once you go continuous. Standard housewrap tape won't cut it long-term against the concrete. Also, if you’re in Zone 4 or 5, don't skimp—go with 2-inch boards for that solid R-10. One more thing: when you set those new vertical studs or furring, make sure that bottom plate is PT wood or toss some EPDM gasket under it. I've seen too many 'fixed' basements fail beacuse moisture wicked up from the slab into the base plate, even with the walls sealed tight.

You definatly need to ditch those horizontal strips. If you're going to glue full sheets like the others suggested, grab some Hilti IDP plastic insulation anchors to hold those Foamular boards tight against the block. It’s way more reliable than just relying on adhesive alone on uneven masonry. Also, make sure you hit the very bottom gap between the foam and the slab with Great Stuff Pro Gaps & Cracks. It seals that transition way better than tape ever will, especially if your floor isn't perfectly level. It keeps the drafts and bugs from getting behind your wall assembly.

Have you ruled out the source of that bulk water on the outside before you go all-in on the interior? Everyone here is focused on vapor and condensation, but if your blocks are actualy leaking during storms, sealing them up tight with foam might just trap the water back there. I'd be a bit wary of creating a 'waterproof' seal if you haven't checked your gutters or grading first. Are you sure you're not just building a nice-looking cover for a future hydrostatic pressure issue? You don't want to find out the hard way that the wall is still filling up behind the insulation.