Styrofoam absorbs water? That's news to me. The stuff they sell as insulation board seems to be somewhat denser that plain styrofoam tho. But neither absorbs water so far as I have heard. Spun Fiberglass dies when it is exposed to water tho so I wonder if your advise is good. From the Lowe's website, the info sheet on insulation board:
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Specifically developed for wall sheathing, basement insulation, siding underlayment and foundation insulation
Excellent insulating properties and moisture resistance
