Been reading for an hour and don't really see the answer to my question, as most people are finishing basements, garages and bathrooms rather than unfinished rooms. This is an unfinished space on the first level of my home. 20 feet by 20 feet, roughly. Of the four walls standing I'll be finishing 3 of them and creating a 4th with framing. Two of the walls are exterior walls and the third is an interior one, with a living room on the other side.

Can I just put drywall on them and go, or is there a need for a plastic vapor barrier-type application. The home is in MD. I've attached pics so you can see what the current insulation looks like. Thanks!

Hmmm, can't add pics like I remember... looks like just links...

http://www.mediafire.com/imgbnc.php/d35b42aafff8652f5da80e1a278665036g.jpg

http://www.mediafire.com/imgbnc.php/6bf67c17154415f489126d3ddfb819626g.jpg

All right, so the first pic is the exterior wall and the ceiling (need to do finish that too!). Above the ceiling is a bedroom. I noticed that the exterior walls have the paper backed insulation.

The second pic is the interior wall and a duct that will need to be framed during the process. Thanks in advance for your input!

Exterior walls need a vapor barrier and insulation. In the pics you posted, the paper attached to the insulation serves as the vapor barrier. Sometimes contractors will choose to install insulation without the paper. In those situations a plastic vapor barrier needs to be instilled. When I gutted my house I used the paper backed fiberglass. Never use a plastic vapor barrier on top of the paper. It will create a space that traps moisture... which is a very bad thing.

Interior walls do not need insulation but some people add it for noise dampening. If you keep the insulation on the interior walls do not use any type of vapor barrier. Vapor barriers should only be used when there is a cold zone on one side of the wall and a warm zone on the other.