Hello Smith,as I understand this is simply a tube intended to supply combustion air to a furnace. It's certainly a diy cure. In addition to insulation,warm,humid basement air must be prevented from contacting tube. Simply wrapping insulation with foil or durable plastic with seams taped is the cure. Needless to say anything near flame must be non-combustiable. I prefer pvc tube for this very reason. Eventualy steel will rust and aluminum will oxidize despite our best efforts.

Fresh air intake connects to the return system and is supposed to bring in outside air and condition it before distribution in super tight houses to stop sick building syndrome.

What you are messing with is the combustion air intake as klem noted. This brings in cold air from outside to use in combusting the fuel which then gets exhausted. It is best to bring combustion air from outside so you do not create a negative pressure situation in the house which brings in cold drafts. Wrap the pipe in foam tape so humidity doesn't touch the cold pipe and condensate. You do not want to close or hinder this pipe at all. It does not actively mix with the air in the house, it goes through the furnace combustion chamber and heat exchanger (while running) and back out the house.

Sayyyy,might one simply remove intake and flue pipes to alow recirculating indoor air and save sending all that heat up the flue to be wasted outdoors? LOL The devil made me do it!