How to fix condensation between layers of insulation in unfinished wall?
The water is coming from the air inside the room, not from outside.  It is condensing on the colder surfaces on the exterior walls (even if they don't feel cold).  What you are doing is fine, it will block any air seepage and add some insulation value, but won't stop the problem you are having.  What you need is a vapor barrier on the interior surface of the insulation to prevent the moisture in the room air from coming into contact with the colder layers of insulation inside the wall and condensing.