I wouldn’t blame the osb, although it does soak water up like a sponge. But whether it be osb, plywood or insulation board, if the water is getting to it, that’s the real problem. Looks like that siding that was made up of osb material is what soaked some of it up and then a problem around the window. Probably just started as a bad caulk joint between the wood window trim and vinyl window trim. And where is some tyvek or felt something to protect the osb at least around the window?
As a veteran Contractor/Home Builder, I have used shear rated OSB for years. We do, however, use a house wrap such as Tyvek over the OSB and around all of the rough window openings. We also apply a bitumen type flashing around all of the window openings and caulk before installing any window to an opening.
I have replaced countless windows for customers. Upon removing the existing window(s) we inspect the rough opening thoroughly for just such damage. On a great many there is usually no damage on the ones that are treated correctly before installation and you rarely find this type of damage.
We NEVER install a window directly over OSB, regular plywood or any other type of shear.
This type of installation shows signs of DIY or handyman work. What many of these type of installations fail to do is read the directions from the window manufacturer for correct installation.
I have seen many ocurrences with wet OSB in my lifetime, and not a great fan of the product to begin with, but I have never seen rot to create manufactured and engineered holes in the softned wood fibers unless some bug or insect finds a home in the humid arena of moisture and food all in the same place. Good munching.
