I too finished my basement. Water not an issue. I used furring strips (1"x2")as studs 16" on center. I used 1" stryofoam insulation between the studs. Covered it all with 4 mill plastic (vapor barrier) As far as electrical goes, you can buy shallow electrical boxes that will work, but your drywall needs to be 5/8" thick. Also, those small boxes make the connections difficult sometimes. If I were to do it again. I would use 2x4's and fiberglass insulation. You will be happier in the long run and it will be easier.