Frosting on uninsulated foundation walls above grade

Hi,

On the summer of 2017 I started a renovation on my basement, mainly because the insulation was very bad (recent bought old bungalow from the 60s). Then, this past winter, I got some frosting on the portion of the wall that is above grade, and only on the corners.

Since this is above grade, I checked weep holes, gutters, opened a drywall upstairs on the corner just to check and see if it had any water infiltration, nothing. So where this water comes from?

I'm guessing condensation, but that bad? It still didn't dry completely, it is not frozen anymore due to the temperature, but I can feel it lightly damp on the surface.

Since I'm getting ready to close it up with styrofoam, my question is, is it normal?

Can I close it up like this, or heat the wall so it dries, and then close it up?

Any advise is much appreciated.

Thanks