How do you fur out a concrete block wall?

If the block wall is relatively plumb, you can use 2x2 or 2x3 wood furring strips. Personally, I use Tapcon brand screws to hold the strips. I recommend a decent corded hammer drill if this is a large project to pre-drill the holes, though. You can also use metal furring strips (hat channels), which may be preferable in basement situations. If the wall is above grade and insulation is an issue, I would just frame out the wall with 2x4's or 2x6's so you can get full-width insulation between the studs. Otherwise, the best you can do is 1 1/2" rigid (which should be fine for below grade basement walls).