Please be patient if I have the terminology wrong. I don't know much about windows. I have a mess of windows to work on. Most of them are probably like the ones pictured below. I took a shot of one that I have pulled out the cracked caulk out of, and one that is still caulked. The latter is not the worst one. Some have a larger wad of caulk that is in worse shape. Note that in the picture with the caulk removed, the strip of wood visible at the edge of the window casing is nonfunctional molding.
The strip of wood at the bottom of the cement siding, above the window casing seems to be the only flashing to keep rain water that is running down the siding from continuing over the window or behind the casing. It does not look that great to me, but maybe this is typical and adequate. Note that at least some these little boards might now be shaped so a little water pools due to decay and my removal of that decayed wood with a wire brush.
Should I just re-caulk and paint or is there a better way to fix this up?