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Looks like this may have been someone's remedy for a deteriorated / rotten mud sill (the flat wooden plate which sits atop the foundation wall, upon which the joists bear). If that is the case, it is possible that you might be able to remove the latter obstruction if one can restore the proper / original condition over the window. That would want to be examined and undertaken by a professional.
As with any such thing, it is difficult to say for sure without a full on-site examination by a home imporvement professional with structural knowledge and experience in these types of repairs.
Did this just happen three years after installation or could this have been there from the time of installation and you didn't notice. Sometimes this can happen, especially on older homes that have old wooden windows where the installers use something like a chisel to literally "bust out" the old exterior blind stops on the window when installing replacement windows from the exterior. The old wood can be very dense and hard to chip off. The force of hitting on the exterior could cause this type of thing or as someone else said, could have a shim putting pressure against the back side of the interior trim. You probably would have noticed that kind of damage right away though.
Typically a 70 year old house has already settled so you wouldn't think that was the cause, unless you are having some other kind of structural problems with the home. If it were water, I would imagine you would see some kind of staining or drips on the interior as well.
It's really difficult to say, unfortunately. It could be installation related, but would be hard to say without pulling off the metal wrap on the exterior (assuming they were wrapped) and seeing what is going on.
Hello! I'm sorry to hear that you are having issues with your windows. From viewing your photos, it appears that there is water coming from up above the window. That being said, it could have been from improper installation or just bad windows.
Please feel free to reach out to us and we can send one of our salemen out to have a look at what's going on with your windows.
EntryPoint Doors and Windows
5018 Bristol Industrial Way Suite 209
Buford, GA 30518
You might consider trying to add a new layer of ceiling drywall using GreenGlue sound proofing adheasive. This gets installed without removing anything too, it should be noted . This will be the most inexpensive aproach but may not be a complete cure. And you'll only lower the ceiling by about 5/8".
You can look up Green Glue on the web for more info and where to to purchase.
If you don't want to loose ceiling height, you will need to remove the celing covering to gain access to the floor joist cavities.
A product we've had great sucess with is Roxul (http://www.roxul.com/residential/create+a+quiet+home/which+safe+n+sound).
Dennis is correct, NARI is a great resource.
Locate a contractor that has a good relationship with a structural engineer. Between the two, they should be able to come up with a good solution.
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