Are the joist bays on the top of your basement wall insulated and air sealed? If not, the draft could be coming from there. And no, you don't want your wall to "breathe", use a can of foam and seal it up.
The warm indoor air holds more moisture in a vapour than cold outdoor air. If you don't seal the leak where you feel the air, then you could have the vapour condensing in that spot. Then you get wet. Wet is bad, especially if you insulated enough to keep most of the heat away so it can't dry out anymore.Ok it is my understanding that the 2" xps board allows some breathability through the board that is slow is this correct? So I seal around the entire foam board against the concrete correct?