Drylock is of questionable benefit, IMHO. It's definitely not a solution to a leaky basement...but it sounds like you've done some regrading already which should help with that.
The reason basements are often musty isn't so much from water from the outside but condensation. Basements are humid and cool, so the walls tend to be perpetually wet. The goal, then is to insulate the walls so help prevent that moist air from hitting the cool wall.
When using fiberglass, that's permeable to the air, so the solution is traditionally to put up a plastic vapor barrier. However, if water does leak in from outside, you've now trapped it.
As such, I strongly recommend going with the Building Sciences corporations recommendation of using XPS foam board against the wall and no additional vapor barrier. The XPS acts as a moisture retarder, yet will let moisture eventually dry through from one side to the other.
I went in to much more detail (including my recommendation to use metal framing rather than wood) with this answer here: https://diy.stackexchange.com/a/8644/1209
When finished, the other objective is to try and reduce the humidity in the basement. If you can bring the basement space into being part of the conditioned space, that's ideal. Alternatively, keep that dehumidifier running.
To answer the specific questions:
Is drylock sufficient to use R-15 batt? Or should I skip it entirely?
In terms of creating an insulated finished space, Drylock is of no use. The purpose of a vapor barrier is to prevent moist air from getting to a surface to condense on. The concrete wall will still be cool regardless of Drylock.
If not then should I put in EPS/XPS? (again Drylock?)
Yes to the EPX/XPS (see my linked answer above).
Would I really need more than that?
Code should dictate what is required. Check your local authorities regarding the amount of insulation you need. EPX/XPS will get you more R-value per inch than fiberglass.
In terms of comfort, the biggest culprits in a basement will be air infiltration, the upper exposed part of the foundation, and the space between the floor joists. Focus on those as well.
I have removed these before. A cut at the bottom bar, which is not anchored into the sill the way the sides and head is. When cut, the 2 bottom corners can draw in, allowing the flanges on the sides to begin to withdraw from the groove they are mudded into. You may want to nick the upper inside corners to make it easier to bend inwards. They might even snap there for you too. If they only bend in at the bottom, that will still have the lower corners raised above the bottom masonry sill by a few inches. With that the head that is keyed in at the top can be tapped down to release it, one corner at a time.
Best Answer
Honestly, letting your wife pick what looks best is the answer. The double tilt sliders are nice if you want to pop them out and clean them I guess. I like the awning ones because you have a bigger window area without sashes in the way. If you do get the awning style, make sure the crank mechanisms are replaceable. I have one in my bathroom that basically isn't repairable without taking the whole thing out. Whether you will actually be opening and closing them and how much airflow you want to have is another consideration. You may not want to have to crank it in an out or remove the screen to unlock it.