I would replace the window casing with tile or Corian. You should make certain that the window sill slopes downward so that the water does not collect on the sill. Use a high quality silicone or a paintable polyurethane caulk at all joints -- no latex caulk! Consider replacing the existing window with a glass block window that is waterproof and private. You can get glass block windows now that have sections that open for ventilation.
See examples below: