Basement – How to insulate a basement wall that has 1×1 framing installed on it

Why would you need insulation on the ceiling in a basement? Since the ceiling is touching a heated space itself, there is no need if you will then be using the basement too. Insulation there should be done only for soundproofing, unless you have radiant underfloor heat installed, in which case, the insulation should have been done already as part of the installation. So insulation really only offers soundproofing value. So the question is, how much noise will be generated there?

Counterbalance that with the rationale for leaving this space accessible. I've often enough needed access to the underfloor regions of my home, for wiring changes, plumbing changes, repairs, etc. So any insulation may be better done as fiberglass batts anyway.

As far as the walls go, filling the cracks is a reasonable idea, IF they are stable. If the walls have moved due to frost heaves, etc. and might continue to move, I would ensure they are stabilized before you cover the wall over. A buckling foundation wall is not something good to have under your house.

The easiest way to insulate concrete block is to glue foam insulation board directly to the block. These boards come in 4 ft X 8 ft sheets and different R values. The other method is to build a wood or steel stud wall along the block to hold blanket style insulation along with electrical wiring etc. This method is a lot more work, but gives you a base to install sheetrock later on.

Depending on whether or not you want the attic area insulated or not, blanket or blown in insulation can be installed into the ceiling. ( this assumes you have a sheathed ceiling). Otherwise, you can install blanket insulation between the rafters. Depending on budget, sprayed in foam insulation is fantastic. You may also want to look at some venting to help exhaust hot air during the summer months. I may add a few comments later, but here's a start.