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Building exterior chimney chase for metal chimney

We installed an exterior new Class A 2" clearance metal chimney on the outside of the house, where the original chimney was. We live in Michigan and need to build an insulated chimney chase around it. We stripped the vinyl siding and the undlerlying thin foam insulation off of where the old chimney was and the sheathing is oak boards with gaps in it over uninsulated walls. Do we need to cover the interior of the chase with drywall or similar material or can we leave the studs exposed? What about the side against the house? What type of insulation should we use between the studs? We thought of foam boards for ease of installation. We're planning on sheathing on the outside 3 walls of the chase with 7/16" OSB. Maybe we should use foam boards instead? The roof notch where the original chimney went through is just wide enough for a 2x4 stud construction + 1/2" sheathing, 22-1/2" wide, and we need 14" for clearance + 7" for the studs + 1" for the sheathing, which is 22"

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