Doors and Windows - water damage

We moved into a 6 year old house 3 months ago. I was redoing the caulking around the bottom of the sliding glass door and started poking around because I noticed some water damage to the wooden frame around the door at the bottom of the sides. Removed a drip cap? (it was above and behind the siding)and poked and found damage behind the aluminum siding. it appears to be an area about 8" wide and 3" high (at its largest points). How do I fix this?

The damage will have to be repaired from the outside. That means you will have to gain access to the damaged area, which means you need to remove the aluminum siding, starting at the top and working down. Just proceed slowly, so as not to damage the siding as you remove it. Toughest part will be to figure out how the top course of siding is held in place. After that one is off, the rest are easy. They have a nailer along the top edge of the siding, which the piece above it covers up.

There is some sort of plastic covered thin cardboard (housewrap?) on the outside of the house. It looks like that was holding in the moisture. Will this "wrap" continue to be a problem? Also, do I need to be concerned about structural strength below the sliding door? The plywood is pretty much like mulch there.

The plywood below the slider is pretty much like mulch? That sent up too many red red flags to count!! Exactly which plywood are you talking about? Is this the plywood on the wall, or a plywood subfloor? Whichever, it sounds like you probably have some pretty extensive water damaged involved. Since you just moved into this house 3 months ago, that could open up a whole different can of worms. Did the previous owners know of this situation? SHOULD they or COULD they have known about this? That is getting into the area of disclosure. You need to contact your realtor.

AnnieC,
Mike (lefty) has a made a very good point.
There may be liability on the part of the seller and the seller's agent for this damage.
Disclosure laws in most states require BOTH to disclose all "material facts" (i.e. defects, etc.) that they know about, or should reasonably have known about, prior to anyone making an offer-to-purchase.
Here in NC, the seller must complete and sign an itemized structural-and-mechanical residential property disclosure form, and the buyer must sign it, too, prior to making any offer.
Additionally, in NC, this form, and the fact that it was provided or not, is specifically noted in the contract. Legally, even a person selling their own property without an agent, must disclose defects.
A seller's licensed agent MUST disclose defects, even if the seller attempts to conceal them.
A. Did you have a licensed General Home Inspection done?
B. Did the licensed Pest Inspector's report note this damage? (If no one else did, THEY should have reported all water-damaged wood because this is conducive to termites.) If a Pest Inspector reports ANY visible damage, then the lender will require a structural inspection by a licensed General Contractor. Was this done?
C. Did the agent specifically point out the visible damage around the door?
D. The most important question: Does there appear to ever have been any repairs to this area in the past, indicating knowledge of the hidden problem by the former homeowner?

With all of that said, it is entirely possible that neither the seller nor their agent knew of, or reasonably could have known of, any hidden damage beyond the visible exterior bottoms of the doorframe. (THAT should have been a red flag for the agent and any inspectors, however). Unknown hidden damage can be missed by all, but that may not necessarily absolve them of liability. Just an honest mistake, but nevertheless...

At this point, you should take photos of the damage as it is exposed, and get a written quote to repair it by a licensed contractor.
Next, consult an attorney.
Next, call the agent or the seller.
Good Luck!

The damage was not evident from the exterior, so I am sure the homeowner was not aware of it. I am fuming at the home inspector because he did not check the area for water damage. I live in VA and the house was not 'disclosed' but was sold 'as is'--which is common. Plus, the way the market is around here, we were lucky to get it, frankly.

It looks like the damage is to the plywood sheathing around the outside of the house. I can see no water damage from the basement. The plywood in this area (below the right bottom corner of the door) breaks into mulchlike pieces when it is poked with a putty knife. Can I repair the damage by screwing in an appropriately sized piece of plywood? We have decided to put on a deck so the removal of the aluminum siding can be done without too much worry about aesthetics, as the band board will cover most of this area.