What part of the country are you? If you are somewhere where winter weather is cold and summers are hot and humid, insulation should have a vapor barrier facing the room side. Polyethylene plastic vapor barriers are not the best as they can cause condensation. You want a true vapor barrier on the insulation itself. The best solution would be to use a closed cell spray foam, but it is expensive. With regards to the plaster board, green board or another water resistant drywall will work great.

I am in Michigan - hot summer, cold winter. was planning on using a typical fiberglass insulation, Have read that the paper vapor barrier on the insulation is not good and should be removed (or buy it without the paper) but then what? absolutely on the green board. what goes between insulation and green board? Thoughts?

Johns Mansville makes a great product for do it yourselfers called "ComfortTherm" insulation. It has a vapor barrier that is great and is fully encapsulated with permeable plastic for easy handling. No itchiness....the key in having the vapor barrier work on faced insulation is to make sure the flaps overlap the face of the studs so that there is not a gap in the vapor barrier. Just don't skimp on the screws in the drywall with the lack of glue on the stud.

silicone on the staples? I have heard that is critical as well to create a complete seal. Also thinking about painting the studs - previous water damage there. recommendations on that?

Never seen silicone on the staple thing...seems like a lot of work for a small return but if you are willing. ...It wouldn't hurt. Painting the studs won't do much, but if mold was an issue, a mold inhibitor would be a good idea.

Thinking on the staple thing...waste of time I think....you will be piercing the vapor barrier every time you install a drywall screw anyway.

Thanks for the help, much appreciated.

No problem glad to help.

agree on the staple thing - seems like an overkill and of course just going to make more holes when installing drywall! Good point!