finishing a braced basement wall

[Marcus Auerbach]

We are rehabbing a nice brick ranch in Milwaukee, WI and are planning on finishing the basement. As you can see on pictures one of the walls is braced. We don't know when the braces were installed, but I would guess at least 3-5 years ago. A lousy paint job has been applied in the last couple years (not recently) The wall seems stable, the mortar between the steel and the block does not show any signs of cracks. It also looks like the drain tile has been redone.

We are debating if we should frame right against the wall or if we should leave some sort of crawl space to allow access.  I like the idea of having access and not "covering up" a potential issue. About a third of the wall is in the laundry area and will not be finished, so the braces will remain visible there. At the same time that means to loose about 100 sqft of rec room space, so that would speak for framing right against the wall.

The basement seems reasonably dry, but (not much of a surprise) the pitch outside of the braced wall is negative, which we will correct in spring. The other question is if we should put rigid insulation behind the studs. Technically the right way to do it, but I have never actually seen it done in a house, probably to save cost. I would really appreciate your comments and thoughts!