Interior Parging

[kfr]

Great site! The Foundation TroubleShooter is awesome!

Now for my question, but 1st some background.

Our home was built in 1945. It has the poured concrete foundation. They seemed to have reused the wood forms the  house's and garage roof which is neat. The floor joist's are set directly in concrete.

Anyway, we are going to be remodeling/insulating the basement shortly. The previous owners seemed to have painted over the inside of the foundation. That paint is flaking. Also, it seems that there is some interior parging that is also flaking off.

I suspect that foundation was trying to breath a bit, but couldn't because of the layer of paint.

I'm not worrying about the paint because it will be covered by foam, a gap and then 4 inches of roxul(R24).

Anyway, should i re-parg the foundation on the inside before insulating?

Also, since the floor joists are "keyed" into concrete, should  the space between each  joist be left open to let air circulate and allow the concrete to give back moisture. I'd like the hear opinions on this.