How should I encapsulate a basement wall with chipping paint on a porous surface?
If you follow the advice of others and use a wire brush to knock off the paint, be aware that the dust particles from lead paint are the main hazard.  There are some precautions on NY's DoH page that I'd recommend, including disposable coveralls, respirator, and goggles in addition to completely sealing the area from the rest of the home (remember the air vents).

If you want to cover the area, you can frame out the wall with thin wood slats or even 2x4's turned on their side. Be ready to shim out each board so they are perfectly vertical and align with each other (you don't want wavy drywall). With concrete, there are moisture concerns, so use pressure treated lumber, a vapor barrier, and the foam separator. In this case, I'd probably apply the vapor barrier to the wall first to lock in the paint and any dust. Then install drywall on top, using mold resistant if you have any moisture issues in the basement.