Looks like a lot of water damage there. Has the water damage been repaired. If not, it needs to be repaired before you can do any repairs to the window and surrounding area. If you are new at this, you may also need to hire someone for this and then watch carefully. There is quite a bit to do to repair all this.

First you need to figure out why you have water damage there.

Anywhere around the window, including the top, sides, and bottom, could have leaks. These leaks frequently occur as a result of ageing caulk or sealant around windows.

You can't fix this until you find out why the window is leaking. Don't be suprised if there is major trouble. Pick up this month's issue of The Journal of Light Construction if you'd like to see how bad this could potentially be please.

Window isn't leaking unless there are windows ABOVE that window. Water at the window head is coming into the interstitial wall cavity from above the window or at the windows connection to the wall. But this isn't the "window issue" to be completely accurate. Let's see the outside.