OK, so I got bad advice confirming my own wrong ideas. But the picture is still not completely clear.
First, as should have been obvious since I talked about installing underfloor insulation, and an air gap under the floor, this shack is on piles. I can crawl underneath. Any major renovation, reflooring, sand foundation etc is totally out of the question - it just isn't worth that much. There is a free flow of air under the building.
The crux of the issue is the relative importance of the sources of moisture. Inside the shack any occupant will create water vapour by breathing, cooking and washing. Clearly this water needs to get out. This is a matter of keeping some windows open. The other source of water is from the wet ground. The question is this: to what extent is this raising the level of moisture inside the shack? I was thinking of the net flow of water through the floor being into rather than out of the shack, hence the plastic idea. Maybe I'm wrong about this. In any case before I thought of attaching the polythene to the joists, I had the idea of putting the plastic on the ground, and maybe this makes more sense.
The insulation is polystyrene foam slabs. I think this is impervious to water, so there is no problem of water being soaked up and causing timbers to rot.
By the way, this is in Auckland, where we have a few frosts each year. I'm not sure that condensation is such a big issue here. The high temperature today, in early winter, is forecast to be 15 deg. C.