Dear Tiffany,
Thank you for companying me walking around the neighborhood.
You asked me to show you different options for waterproofing and insulating your backyard shed. Here are the perspectives of how I approach this issue.
Waterproofing Alone
First, waterproofing materials' fundamental science is blocking water, water vapor, or condensation. Thus, a water barrier in most scenarios primarily applies to the structure's exterior face. The water barrier comes in several forms:
a bituminous coating.
a breathable/permeable barrier
a weather-resist elastomeric layer
a peel-n-stick membrane
However, considering the condensation possibility in the assembly, the water barrier location needs to be revised based on the climate zone.
As a rule of thumb, when the cold moisture meets warm conditions, the moisture condensate and becomes fluid. The shed is located in climate zone 4A; thus, it is considered a cold climate, and condensation occurs.
Condensation and Insulation
There are three general ways of insulating masonry walls: on the outside face, within the wall, and on the interior surface.
When insulating the outside face, see the sketch; the dew point will likely occur before reaching the water barrier. Thus, we place the water barrier outside of the structure. When insulating on the interior surface, condensation might happen before reaching the insulation. Thus, we place the water barrier before the insulation and leave a drainage layer between the concrete block and the insulation furring strips.
Retrofit Existing Buildings
In many cases, the EIFS (exterior insulation and finishing system) is used for insulating the existing masonry structure because that method is easy to apply, and the external appearance of the building does not need to be retained. EIFS are panels of rigid insulation covered by thin layers of polymeric stucco reinforced with glass fiber mesh. You can often see this material at a suburban shopping mall.
On the other hand, this shed is located in one corner of your friend's backyard (which is pretty typical, by the way). It is abutting his neighbors' fence both on the south and west side. Unless the owner demolishes the fence between him and his neighbors, having access to installation at the south and west locations seems almost impossible.
Therefore, we can insulate the shed by attaching wood or metal furring strips to the interior side of the structure. Metal furring strips are ideal because they can solve another chronic problem from a typical masonry construction. The furring strips create a space where electrical wiring and plumbing can easily be concealed.
If the shed was initially used as storage and had no interior finishing, it would be a more straightforward method without altering much of the existing interior surface.
I hope this helps.
Your affectionate friend,
Hepburn