EIFS (Exterior Insulated Finish Systems) are the culprits for all the lawsuits. It is NOT stucco! Has virtually nothing to do with stucco other then giving it (genuine stucco) a bad rap! They will never get this stuff to work. The flaw is in the design......No matter how you install it it will never work. I challenge any manufacturer to take me up in debate on this. They are going around saying that the faults lay in the installation.......but just think about it for a second......how would you like to live in a styrofoam cup? Might sweat a little, huh? It's the same thing!
So, if you are talking about EIFS......well......good luck.
However. If you are talking about stucco that's another thing altogether.
The flashing around windows (the flashing that is part of most pre-fab window frames today, should be under the tar paper above the windows and below the falshing below the wondows. This way the water above the windows will flow over the paper above and over the flashing below.
However. This may not be the case. Has the plasterers installed the paper starting from the bottom of the wall going up? When done this way the water will flow over each successive layer. If not then the water can run down and under the layer below. (anyone calling themselves a plasterer is aware of this tho).
As far as the wood rotting.......could happen. But, with stucco (the real stuff ya know) the moisture can evaporate rather quickly. I would think it would happen.......