Hi. First-time poster here. Our house has a laundry room that used to be a detached 1-car garage. At some point, a previous owner built an addition between the original house and garage to turn the two separate structures into one (the addition became an extension of the living room), and they put up a wall in the garage to make two rooms - a smaller garage and a laundry room.

The laundry room/garage is a concrete slab with a stem wall (I think that's what it is called) which is 1 layer of cinder block. The walls are on top of the stem wall, and the stem wall sticks out about 2-3 inches from the sheetrock (there is concrete "ledge" along the bottom of the walls). This room is not insulated, which is problematic now that it is connected to the house.

I want to insulate the laundry room and I would like to make the stem wall go away (I just want drywall going from floor to ceiling). I was thinking I would build new walls on top of the existing ones by fastening new studs to the existing studs (thus bringing the walls in 3.5 inches), then insulate (so the insulation would attach to the new studs directly on top of the existing drywall) and then place new drywall. This way I could hide the stem wall with the new walls.

What I need help with is how to deal with the stem wall and putting drywall over it. I think the new studs would stick out about 1 inch or so beyond the stem wall. The existing studs are resting on top of the stem wall. I don't know whether to place some more sill and have the new studs also stop at the stem wall, or take the time to cut a notch out of each stud so that the interior-most aspect of it could come all the way down to the floor. The first way would be a lot easier, but then I wouldn't know what to do with the drywall that covers the stem wall without any studs behind it (i.e., what would it fasten to? and how would I attach baseboard?). The second way would be a lot more work but doing it that way would allow there to be stud spanning the entire vertical distance of the wall and I'd have stud to attach the drywall to down below, and baseboards wouldn't be an issue. But I think that doing it the second way would mean all of the studs need to be pressure treated since they would be very close to if not in direct contact with the cinder block? In either method, is there something that I would need to put over the sill to seal it?

I hope this makes sense. Sorry for the long post. Any advice would be much appreciated. Does this sound reasonable, or is there a much simpler way to go about this? I would upload pictures of the room if I knew how. Thanks!