Condensation happens when the surface temperature of an object is below the dew point of the surrounding air. That situation happens in buildings in two ways: in winter when it's bitter cold outside and the interior is heated and humidified, or in summer (in some climes) when it's very warm and humid outside while the interior is cooled and de-humidified. In either case we have a temperature gradient from warm to cold through the wall assembly. If the humidity from the warm side can find its way to a sufficiently cooler place in or on the wall, it'll condense there. If a wall isn't insulated very well then we may see the condensation on the surface. If the wall is insulated well, but its vapor barrier isn't done well, then condensation happens inside the wall where we can't see it.
All that said.. the general consensus seems to be that if the budget supports it, then removal of the interior metal, installation of sprayed-in foam, and finishing the interior walls such that thermal bridging through the insulation is minimized is the way to go. The runner-up is to fit pieces of rigid foam board together with joints sealed (good tape or spray foam).
It's possible to design wall assemblies so that water vapor can't permeate (to a significant degree) to the point where it'll condense. It's also possible to design wall assemblies to minimize damage and dry effectively when it happens anyway. Joseph Lstiburek of Building Science Corporation has written a great deal of fascinating material on the subject, which can be found online.
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