ᐅ Roof insulation, knee wall, cold roof to warm roof conversion

Hello everyone.
We have purchased a mid-terrace house and are now facing the task of roof insulation.
The roof sits on a knee wall approximately 40cm (16 inches) high, and there is a wall with additional wooden studs about 1.0m (3 feet) away. This cavity is not insulated at all, and you can see the roof decking directly. The sloped ceiling inside the room is insulated only with fiberglass batts in bags, without a vapor retarder, reaching up to the collar beams at about 2.40m (7 feet 10 inches) height. The ceiling is closed at the collar beams, and the same batts are laid on top of them.

We plan to open up the attic space, fully insulate the roof with 140mm (5.5 inches) of insulation between the rafters, install a vapor retarder, and insulate and cover up to the wall.

How should we proceed with the knee wall? Should it also be insulated with 140mm (5.5 inches) of insulation and include a vapor retarder?
The vapor barrier would then be interrupted by this wall; would it be a problem if it is sealed tightly on both sides of the wall?

Thank you in advance for your answers.