Wood – Could this nothch in the sash been made by termites

Not termites! According to an NMSU Entomologist who examined my pictures, they are a type of Springtail.

Thanks for turning me on to this whole "local cooperative extension" thing, Wayne. What a great resource!

Scoria.

A while back I did what you described–I dug out my stem walls down to the footings. Then I wire brushed the walls clean and painted them with a concrete sealer. Then I insulated.

I considered high density ccSPF but it's quite expensive. So I installed two 2" layers of XPS foam because it's the least absorbent. Then I installed a sticky fiberglass mesh to the XPS and troweled on an 1/8" layer of Tuff II Foundation Coating. Tuff II is primarily used above the soil to protect the foam but I went down to the footings to prevent the gravel and any tiny mouths from tasting the XPS.

Between the foam and soil I filled the trench with drainage gravel, to keep moist earth distant from my insulation and walls. Had I ever seen a termite near my home I'd have added a layer of scoria or that special sand that's supposed to deter them. I set landscaping fabric between the gravel and soil to keep the soil out of the gravel layer.

While backfilling, I also graded the ground around the house. After properly sloping the soil to drain away from the structure, I laid a 6' strip of 6 mil plastic over the grade. I covered the plastic with scoria and decorative gravel that my wife and kids picked out. The sloped plastic layer pushes water out away from the house before it can start percolating down.

It's only been one winter since I did that work but so far, so good. My basement walls are warmer, there's no evidence of unwanted biologicals invading my XPS or home, and my sump pump hasn't run in two years. I don't have a way to measure but I expect my stem walls moisture content is lower than in the past too.