This was a project far outside of my knowledge base, so I turned to the internet and my friends for A LOT of help along the way. Although my husband and I had no experience in any sort of house-building, drywalling, or insulating, I thought we would be able to tackle it. Plus there really wasn't another option--we had just bought a house after all, so funds were absolutely nonexistent!
First I took down the wooden shelf in the shed so I could start with a blank canvass (and use all that excellent lumber in a more efficient way). An electrician friend of mine put in a new breaker and ran electric out to the shed, adding two outlets, a light switch, and a spot for an overhead light.
I found a steeply discounted window at Home Depot--$40 instead of $197. It was a lot larger than I was picturing for my shed, but at $40 for a new, energy-star, double-paned window, it was even cheaper than the older windows I found at the Habitat for Humanity Restore. Using the scrap studs from the big wood shelf, we framed the window, shed corners, and an AC unit into the wall using knowledge bestowed to my brain from the wonderful internet.
Since we live in Florida, the AC unit was a must. To save on energy cost I insulated the shed, shoving insulation in every single spot I could. This was the only part of the process that (unsurprisingly) no one wanted to help with, but even so it was faster and easier work than I expected.
After insulation it was time for making walls. My best friend Linden came over for an all-nighter of drinking beers and hanging drywall. She had a little more practical experience at drywalling than I did (which was NO experience) and made easy work of it, even perfectly cutting the odd angles where the wall meets the barn-style ceiling. We spent the whole night laughing, drinking, putting in drywall, and mudding so it would all look pretty when it was painted.
Next I put a few coats of floor polyurethane on the plywood floor. I may add more substantial flooring later on, but my main priority is to have a floor that is easy to clean and that I'm fine with getting covered in paint splatters, clay, and whatever other kinds of messiness I make. I am not a clean artist, and I've paid for many carpet stain in my days of apartment renting. After the mud on the walls and ceiling was dry, I covered everything in a drywall primer and then in paint we had leftover from the rest of our house (and some left-behind white ceiling paint, score!). I bought a bunch of baseboard at the Habitat for Humanity Restore for a total of $6 and it was more than enough for the whole shed.
At the point the shed was essentially a finished room complete with a lovely window and air conditioning. My father-in-law and I built shelves for the space using this classic instructable, and I used up some leftover stain and paint from other projects to finish them off. Those shelves are seriously amazing. You should cover your house in their awesomeness. Once the shelves were in there was only one thing left to do--move all my art stuff into the studio!
Since we have so many wonderful friends who came to help out and we used a lot of leftover scraps and bits in the project, the cost to convert the shed into my art studio was pretty low. Adding electric, insulation, the window, drywall, paint, and baseboard was just over $500. The wood and hardware for building and installing the shelves was about $80.
The space is full of good vibes (as well as the sweat and love of my friends, which I think adds to the vibes being of a predominately "good" nature).