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Check the weepholes and make sure they are not clogged. These holes allow water to drain outside of the window, and are on both sides of the window. If they are clogged then the water will drain wherever it can - inside your walls and house. When the window is closed, you are making it harder for the water to get inside. I suggest taking the tip of a knife and just cleaning them out to see if that helps.
Condensation is caused by high humidity in the home. Often times when you get your windows replaced from single pane wood to a double pane vinyl - you will notice this issue. Older windows tend to have more leaks in them, allowing the excess moisture to escape - therefore it will not form on the window. . . but once you eliminate that escape, the moisture will start to sit on the window. This can be a problem if you have not treated the wood on your sills / trim work - so make sure you do that. Also, get a humidistat and you can google ways to control the humidity in your home.
Hope this helps!
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