How can I frame a wall in a confined space?
I recommend that you should insulate this room like a basement: with rigid foam covering the exposed masonry walls, with the seams and edges sealed off to make it an air barrier. No need to frame anything at all if space is at a premium. I wouldn't frame anyway without rigid foam here, since the thermal bridging of the studs will compromise the insulation (especially steel framing), and a less-than-perfect air barrier will cause condensation on the walls that will drip down and rot out the bottom plate or rust steel studs from the bottom.