At the bottom where the last step flashing protrudes out should have been cut on an angle and bend over some to direct any water back into the gutter.
Water getting behind siding.
It also performs the important function of protecting the interior walls from the outside elements.
We get significant rainfall along the gulf coast where i live and that leads to a lot of siding problems.
The siding should be cut about 1 2 or so from the bottom along where the shingles meet the corner.
It can get behind the siding and cause serious problems within the walls as well as leakage in the basement or crawl space.
At some point in the past an owner had vinyl siding installed over old siding.
Water should not be allowed to run down the siding.
The shingles should be hanging about 1 4 inch to 1 2 inch beyond the drip edge so this may be your problem.
But siding is more than just a pretty face.
This is most prominent in j channels that run horizontally such as trim running along a window frame.
Use a caulking gun to apply a continuous bead of silicone sealant along the vertical seams between the vinyl.
When water and snow create moisture behind it the siding no longer offers the protection necessary to keep your home safe.
Inspect the area above the leak including both indoors and out.
The extra thickness of the vinyl.
Check to be sure weep holes are open along bottom of window openings.
There should be step flashing along the wall under each shingle and behind the siding.
Water runs down the siding and can collect in the j channel.
Preparation for siding while correct installation reduces the risk of water running behind the siding it can t completely stop it.
Rainwater leaking from a gutter ends up behind siding and causes a wall to rot.