Just thought I'd update the thread a bit seeing as how I'm on the tail end of this project.
First things first, there weren't any footers so I didn't have a seam between that and the walls to seal.
The foundation ended up being 2 rows of cinder block with a single row of cinder block stacked on top (this is what the house actually sits on) and the outer row of block was spackled over. Due to this I could not use a membrane wrap as that 4" ledge would have cut the membrane.
What I did was cut the insulation board at the same height as the top of the double wall foundation.
The plan is to clean off that failed mortar on the 4" ledge and bend up some flashings to go over the ledge and over the face of that below grade insulation. There will be insulation over that ledge (under the flashing) and insulation against the single wall foundation (over the face of the flashing. That should keep the water from getting in through that ledge. The exposed insulation will be spackled over within the next month as well.
We dug 6" below the level of the foundation walls and found 4" drain tile that was set on 2-3 of clear stone and back filled with solid clay. The drain tile made a complete circle around the house, no drain field.
What replaced that was 6" socked drain tile just below the foundation sitting on 6" of clear stone with a 1/2" drop every 10' making its way to a drain field that's just less than 300' away with a 1' drop every 12'. The drain field is 10' squared and also full of clear stone. By the drain tile, there's 2' square of clear stone, then 6" of clear against the wall until just a few feet below grade. The rest is all fill. That alone should alleviate any water concerns just having that additional space for water to congregate.
The "dirt" we were digging up was solid clay. This could have been tossed in an oven and turned to brick. There was zero drainage anywhere. We ended up getting 4" of rain in 2 days while the trenches were all open and the drain field filled up to 4' high and hasn't dropped at all in the 4 days since it rained last.
The last things left are to install the egress window
And fill the drain field. I have a 12" diameter pipe going into the center of the drain field 2' above the bottom where a sump pump will be triggered to pump once the drain field hits 6' of water.
Just a quick update, but there's a few more "huh, WTF is that"'s to show.
Moral of the story: Don't trust inspectors (I paid 7 different inspectors in 7 different fields to verify the condition of the house), don't buy used/old houses if you give a shit what you live in, and build new at all costs being your own general contractor.