I'm putting a living unit in the 40 x 28 basement of my 1924 bungalow in the rainy Northwest. I put three coats of an (inexpensive) sealant on the inside walls and on the outside of a problem corner. Downspouts were disconnected and flexspouts used to move rainwater away from the home. We first put up a vapor barrier on the inside basement walls, followed by insulation. But condensation quickly formed on the barrier, wetting the insulation. Condensation did not occur in the problem corner that had been sealed from the outside. But we pulled down the insulation and pulled off the barrier. I'm now having someone dig around the foundation and we will seal it with emulsified asphalt. Should we reinstall a vapor barrier against the wall after the outside has been sealed? Or should we put insulation against the wall and a vapor barrier on the outside (warm) part of that?