Thanks to all again. The window is in our garage. I've reviewed your advice and will be consulting a builder to replace the stud parts of the wall and replacing with treated timber. @Fred99 I will try the injection epoxy on the crack, thanks for the tip. I am also going to be replace much of the windows seals and furniture so after these works are done I've only the builders paper to replace and then I can approach the council to then ask about lining the garage with jib. Lots to do and much planning and talk to be done.
I have a similar sort of issue with leaking at my house, except it's around two attic louvre vents. I should get a few pics together of the problem and post a new thread for some possible solutions to my problem.
I work for a window company, and in this situation as a couple people have mentioned I would remove the entire window frame. Remove and replace all 4 timber jambs from it and replace them - They look like 19mm jambs which is the same as what we still use, with the exception that we only use H3. Making sure that new sealant is put in the mitres before the new timber jambs are installed. (seals back side)
Often when joinery is that old, the small joint (glue) that is applied to the corners during manufacture can break down (depends on how much sun, rain etc its had over its life). When the timber jamb is removed you can often see if the corners have come apart or have gaps etc Its a good idea to have the glass removed and reseal the corners (Seals front side). for the side with the sash, you can just open the window to do this seal.
Then used a galvanised sealant on the underside mitre joins.
Also check to make sure that there IS drainage, and that it isnt blocked. Sometimes they never had any, some times people did it wrong / insufficient when manufacturing.
Then frame flash/membrane round the corners and sill as already suggested.
PLEASE NOTE: Joinery this old will probably have 3mm glass in it. The old and thinner the glass, the higher the chance of it cracking when trying to remove it. It will more then likely be stuck to the backing rubbers, and needs to be free'd slowly, trying to pry it from one corner will likely end it snapping the corner off. If you remove the timber jambs and the corners look really mint, then its perhaps not worth doing the front seal.