The plastic is what encourages the mould. But with 2 inches XPS against the wall, you're safe no matter what. I'd use the paper-faced as is. (I hope you placed the 2x4 plate on strips of XPS, or at least on some poly to prevent wetting by capillary rise.)

I've never bothered with the paperless drywall. Just cut the regular drywall high enough above the floor to protect it against any flooding. And use a dehumidifier when necessary to keep the relative humidity no more than 45% in summer. I've seen some discussion about extra difficulties in finishing paperless drywall, but I haven't use it so can't comment on that.

Here is a link that might be useful: Basement Insulation Systems

I shared my experience with Dens armor at here:
http://ths.gardenweb.com/forums/load/basements/msg080856198990.html

Since writing that, Home Depot stopped selling it (but apparently Lowes has is). After I shared my experience with the Contractor Desk, they admitted that the drywall pros complained the most due to irritation, itching, etc. Also, now greenboard is apparently being made better to compete for the "anti-mold" dollar.

I used the DensArmor in my basement and it irritated my skin somewhat, but I certainly didn't put up as much in a day as a pro would.

Will it help prevent mold problems? Who knows. It seemed like a good idea at the time and I was interested in doing everything I could to avoid problems later. It didn't cost much more than regular drywall. I did have to skim-coat it to get a smooth finish, but that wasn't difficult.

I wouldn't use Home Depot's decision to stock something as an indicator of its quality; it's my opinion that they will drop products for a host of reason, many of which have nothing to do with quality.

Bill

Good point.

Around here (Washington DC/ N. VA), the regulars have to know which home depot stocks which stuff, even for all the items for ONE job. If they ever addressed this, their sales numbers would certainly go up. BTW, they're not even the cheapest anymore, which was the one advantage they exploited to gain market share in the first place.

"The plastic is what encourages the mould"

So the encapsulated insulation is no good...why do they sell it. Wouldn't plastic be better?

Where can one find unfaced batts for 2x4 walls...NO one sells it, at all. Most unfaced insulation jobs is really in attics where you are beefing up the prior insulation in the joists, no?

In general, without xps on the foundation wall, plastic would encourage mold when attached to the studs. But in your case, with the XPS, it's probably not a big deal. That being said, the thing to do is peel off the paper face (instead of cutting slits). Still, as worthy mentioned, you'd probably be fine leaving it on there.

Here's a thread from JLC where the pros discuss the difficulties they're having in finishing DensArmor.

Worthy,
That was an interesting and helpful thread. thanks