Last fall while investigating the cause for Taya's drafty room at the front of the house, I noticed that the rim joist below her window was completely rotten! It was so compromised that I could pull it apart with my bare hands. I consulted several experts, including the house's builders only to find out that none of the damage was covered by any warranties. One basement remodelling contractor actually estimated, without quoting, that it would cost around $2500-$3500 to fix the wall because he wasn't sure the extend of the damage without pulling the sliding off.
With that knowledge, I enlisted the help of my friend and coworker, Chris, who luckily has a helpful construction background. We waited until this weekend to tackle the job, hoping that the weather would cooperate better than in January. It was around 40 degrees all day with scattered showers. Not too bad, but not the sunny 60 degree day I was hoping for in April.
Below are the images chronicling how the project was done. Needless to say it went much better than I thought it would.
Before. There is a lack of flashing above the window, especially the sliding J-channel, difficult to see here.

Water damage in the trim around the window, most noticeable at the lower corners.

After removal of the siding we found a lot of water damage and foam sheeting, not sad to replace that all. Surprisingly, there wasn't damge along the window and further investigation revealed only limited damage to the mudplate. No damage to the insulation or verticle wall studs. The hole was where I had pulled the rim joist apart with my hands from the basement.

We removed the trim boards and damaged wood.