I have an attached building with three external walls, two are clay, the other is brick. I have considered a range of insulation options but cannot decide on the best course of action. (Have decided against external for several reasons). I thought about using wool and cover with fibreboard to allow breathability. Someone suggested that I may need to consider using a membrane against the external walls before applying the insulation to prevent any condenstaion on the surface of the wall making the wool wet, which would then smell. Is this necessary? I was going to put the insulation against the walls between studs, with the studs being away from the wall to avoid thermal bridging, then cover with a pressed wood fibre board and finish with lime.
Would using a membrane negate the use of breathable materials on the inside to allow the clay walls to breathe and prevent a build up of moisture that could result in failure of the structure? I assume a membrane will allow vapour flow in only one direction. Or does a membrane allow vapour flow in both directions but prevent droplets from passing? If so, where would the moisture that builds up on the inside of the clay walls go? Would it build up until it eventually causes the walls to collapse? Could a membrane be used the'wrong way around' to allow moisture away from the wall but not into it, or is that just stupid?
I seem to be stuck between a rock and a hard place. If wool gets wet from condensation against the wall it could start to smell. If I use a membrane to prevent that from happening I could potentially get a build up of moisture on the (clay) walls that could subsequently cause their collapse. Would it be sufficient to rely on breathability on the external face of the wall, which is only about 200mm thick, and use a product like Celotex to insulate then cover with plasterboard, rather than go to the trouble and expense of using natural, breathable materials?

how about a lattice timber structure for your dummy internal wall. say 100mmx50 uprights with 50x50 cross battens. Your wool insulation sits within and over the 100mm timber preventing direct thermal bridge (other than where timbers join - but thermal resistance of 150mm internal timber should alright - shouldn't it?). hemp mesh on the rear side of the structure to keep the wool in place with 50-100mm cavity between timber structure and clay walls. wool is hygroscopic so will absorb moisture then release it later when humidity drops. provide combined passive and mechanical ventilation to cooking and washing areas. ensure good night time ventilation. board it as you state above. install a wood stove and construct a cordwood partition wall or feature of some kind to aide moisture control.
capture south facing solar. have a garden kitchen for steam intensive cooking.
make sure that the timber sole plate is well protected and all cut ends are treated with boron. you could placate tony by telling us theres no insulation in the floor.

can i say no insulation in the floor before tony does?
you'll have to look up an old thread jase to see the reasoning for that. or maybe tony will brief you on it.
i'd go 600mm c/c on the uprights and 400mm c/c on horizontals with double width timber where boards abut each other. depending on budget i'd suggest perinsul perimeter insulation under the timber frame.(http://www.foamglas.co.uk)
i'm expecting to be thoroughly slated over these comments jase so dont get your hopes up too early. some idea of heating source, type/amount of glazing, especially to south face, and type of roof - location of insulation (warm/cold roof) and size of roof overhang would help this along. also whether theres any ventilation at present (intentional or otherwise). i'm off to build a barricade.

When you say the walls are "clay" do you mean cob? Is it a good idea to insulate an earth wall internally? I don't know the answer to this but my preference would be for the earth to be on the inside of the insulation exposed to the warmth of the house, rather than on the outside exposed to the wind and rain and cold.