insulating my old house ?

The way it is done. 2x6 walls for the exterior of the house(which are the walls that get cold or hot) and insulation goes in there R30 to fill the 2x6 gap nicely. Then plastic is put on the studs on the inside, stapled and dapped to the 2x6 walls and the ceiling gets has same plastic film on the inside.

Styrofoam is insulation to replace areas where glass cannot go say like on concrete walls in the basement. They are dapped onto the concrete. Once dry plastic is put over the foam on the outside walls only - as the inside of the house should be all the same temperature. - and dapped to the foam. Now if you wanted to put up wallboard downstairs, 2x4 stud framework would be a wise thing to have so at least you can run electrical, and nail the wallboard to something.as the studs are fastened to the ceiling and the floor plate which is either screwed down or nailed down into the concrete.

Back upstairs, you put on gypsum or wall board nailing it to the upright studs. Also same for ceiling. And do the wiring for the ceiling from above. Now get the guys to blow in a foot of insulation onto the ceiling so it lays ontop of the gypsum. Now it is closed up proper.

The plastic is to stop the humidity from entering the walls from the human activity(the farting, burping, cooking, showering, steamy sex, and breathing) Yeah there is that much moisture.

Insulation, once wet does not insulate.

The roof, and the siding protects the insulation from the outside elements.

And air flow thru the gable vents prevents mold from growing as the air is always moving and taking any excess moisture from the wood or air naturally out of the house..

Styrofoam is just crappy for wall material as it is too soft. Very soon it will be dented and ripped and gouged. Besides that pricey. You got a nice picture you want to hang? Can't stick a nail in styrofoam.

Don't forget, you still need to get some airflow so that the insulation does not mold if it gets moist from condensation. I wouldn't do the plastic. You are good with the R13 if they are interior walls. I would also sheet rock instead of using paneling. You will spend a little more but it's way better than styrofoam and paneling. Too flimsy.

Good Luck