By - Shoe-in
Without looking it is impossible to tell exactly what to expect but, this doesn't sound good. Do you know if any of the rest of the wall has any kind of weather proofing at all?
The reason it is leaking is most likely near the top of the window and if the wood is rotting then it is most likely into some of the structure around the window (jack stud & King studs)
is any of the plywood rotted? If any of these are an issue it is going to be a lot of work.