Hi,
In a storm water may seep thru gaps in the window iteself but water
behind drywall indicates water proofing on the window frame is
compromised. And/or bottom track is not draining water properly. Outside
the track there ought to be small holes for that.

When you you say "water proofing on window frame" do you mean the rubber
replaceable seals, or do you mean that water is getting behind the siding
and running behind the drywall, or do you mean something else?

If it's a window issue, then what I'm suspecting is that water is getting
past the seals and hitting the inner wood frame and then somehow making its'
way to the drywall without

Not sure what you mean by bottom track. There is a metal outer sill, but I
don't see any drain holes. Also at the bottom, there is a piece of wood
(inner frame) where the crank handle is located. I'm suspecting that if
water did get to this inner piece of wood it could possibly make it's way
into the drywall or am I mistaken in thinking that. A section of this wood
(further toward the corner than the crank handle) did appear to be wet. So
what could be happening is that water is getting past the seals and hitting
inner frame but somehow making it into the drywall without visible signs of
the inner frame being wet from the inside...is that possible? Or I suppose
it is possible water is getting past the seals at the top or side.

In other words, if water does get past the replaceable seals, and happens to
hit the INNER wood frame (NOT the sash), is it possible that the water could
be making it's way to the drywall without any visible water seen at the
window itself inside the house?

J.