Walls and Ceilings - Rotted Exterior Siding

I need to repair the front bottom corner of my woodgrain siding/corner board. My house is 16 years old, a split level with garage doors on one half of the front and wooden stairs and porch on the other half. Between termites (which we caught early, thus very little damage)and carpenter ants, the 2 bottom panels of siding are dry and brittle (just around the corner board) and give with slight pressure/prodding. I have a cement walkway edged up to the siding leading to the front stairs from the driveway. Someone told me it is better to not let the siding touch the cement(as is the case currently). Is there a clearance or something I need to know that should have been done by the builder (which I have my doubts about his sanity, considering other things we have found in our house) that I can remedy while I make these replacements. Please take into account I live by my Home Depot Home Improvement, step-by-step to do everything book and will need help with vocabulary. Thanks so much, I love you guys!

Untreated wood siding should be at least 8" above ground level, and that is if the ground has been professionally treated for termite infestation.
Termites will tunnel up over concrete, brick, cement, vinyl skirting, and certain types of wood (pressure-treated wood, cedar, cypress, etc.) to get to untreated pine or other wet wood.
Any wood touching the ground will wick up water.
However, certain wood trim, such as brick molding around a garage entrance, can be sealed with primer and paint on the ends, behind it, all sides, etc. to slow the process.
Once it gets wet, it is just a matter of time before untreated wood is a goner, termites or not.
Smoothly saw off the rotted wood, and replace it with pressure-treated. Seal the seams, ends, etc. with caulk, primer and paint.
Good Luck!