Stucco failure under grade.
You can see at the bottom right corner of the window where I have put some sealant in a crack but that is where the water is still seeping in and has caused the larger crack around the corner wall..
I will take care of the mildew and place a barrier to prevent further water getting into the seam crack at the bottom of the window but ultimately I want a long term prevention and cosmetic repair.
Water is soaking in and the stucco is popping off the wall in a one piece slab. This stucco goes down below the grade, So this area needs to be dug out to get to the root of the problem. If the framing is below the grade, that is a disaster waiting to happen. Framing under the grade is a termite invitation.
There aren't any gutters or downspouts on this house, a trend that is popular in this area of Virginia. The splashback from water coming off the roof is seen by the black and green areas. This sill has to go. It is a giant water funnel.
I have a feeling the expansion joint near the bottom of the wall aligns with the foundation. This is another terrible practice that needs to stop. There is a idea that dissimilar materials such as wood framing and block or concrete should be separated by an expansion joint. We have found black areas from water damage under the horizontal expansion joints. The back side of these joints have a small quarter inch lip. If the wall saturates with water the water trickling down can run over the backside of this lip. The Northwest Lath and Plaster bureau recommends a rubber membrane flashing behind expansion joints, a practice which isn't used here. Our jobs have a drainage weep at the bottom, except for very historic work, or if an owner insists on taking the stucco below the grade, for whatever reason. This horizontal expansion joint stops the downward flow of water and stops the drainage, making drainage weeps at the bottom completely useless.
What makes matters worse is the wall leaks at the foundation. If the foundation is concrete, water can sit on top of the concrete and be absorbed into the bottom plate, or the 2 x 4 holding up the house.
Caulking on the sill probably doesn't do much because water saturates that sill anyway.
The only long term solution is to dig out below the window down to below the foundation level, and also tear off tear off the expansion joint and patch the stucco.