Should the ICF foam be removed from the inside face of the ICF wall where the basement slab strikes it for a house to be built in North Alabama? Does the slab need any expansion space where it hits the ICF wall? If so, then is there any worry about termites using the inside foam for tunnels to enter the basement?

Just the other day I saw a video documenting a bad case of termites tunneling through foam to get into the house. But the issue doesn't come up if the ICF wall sits on top of the slab.

The foam of the ICFs will pose no serious problems with the floor slab. It will give enough to provide any needed expansion for the concrete slab. I would never build basement walls on top of the slab. I want the slab to be able to act independently of the walls. This cannot happen if the walls are sitting on the slab. It also creates a major potential waterproofing problem at that joint. I want the walls sitting on their own footer, and the slab 'floating' equals less stress and cracking.

I thought about removing 4" plugs from the ICF to allow concrete from the slab to flow up against the concrete in the ICF. On a traditional poured wall and slab, the slab helps provide the necessary lateral support at the bottom of the wall. The ICF foam doesn't do much for this, so either a keyway in the footing or a bunch of dowels are necessary.

As far as expansion, I cannot see where there would ever be any expansion. Concrete contracts as it cures. The gap between the wall and the slab will grow when the moisture evaporates out of the slab.

As far as termites, I'd have to beleive that a slab sitting directly on a footing would prevent any critters from getting to the inside foam.

According to Logix ICF's website, they have forms treated with an insecticide (Imidacloprid) for heavily infested termite areas. This chemical may also be the same or similar to Preventol. It appears that we are getting away from using Borates in the EPS. I was told at the SEBC trade show in Orlando that Borates weakens the EPS and the Borates are water soluble which are subject to leaching out.

Thanks to everyone that responded.

More info about termites and foam:

http://epscentral.org/epsinfo/docs/Insect%20Protection%20of%20EPS%20Insulation%20-%20Cyndi%20Fink%20%5BCompatibil.pdf

Like we engineers like to say, "It depends."
Many basement walls are designed to use the slab as a restraint against the soil forces. If so, place the floor up against it, or with a good, stiff, joint material. If yo don't, it may move over time, depending on soil conditions.
Concrete shrinks as it cures, but expands as it heats. Temp is usually pretty stable in a basement, though.