First, let me thank everyone for your opinions, they're useful and as usual, insightful.

As to the window install. At the time of the inspection the only visible "deviation" was the absence of a head flashing. According to LP SmartSiding and Jeld-Wen Window installation instructions, a head flashing is not necessarily required. LP shows a detail with a head flashing when a band board is used above the window and w/o a head flashing when no board is above the windows.

Some of the other issues: how much spacing is required between wood siding and window? The typical installation instructions are for a 1/8" gap for panel siding. Again, the LP instructions are a little ambiguous showing both a 1/8" gap in one picture for "self flashing windows" and in other places stating the need for "a 3/16" gap where siding ends at the trim around doors, windows and other openings." Practically speaking, do you really want to make an issue of 1/16" of gap--especially when it is not clearly stated? Backer rods behind caulk... are you kidding? How often do you see that in residential installations and how often do you point it out as "not according to manufacturers instructions" in your reports?? Myself, I would not unless it resulted in some obvious problem and clearly there was no obvious problem visible.

Jerry, you comments about the gap between window and siding at tops and sides being so close that siding will absorb water is noted but rarely leads to rot in Pacific NW climate. It's not unknown, but not really a big problem. As for no place for the water to go except down the back of the siding--well that's true and that is the way the panel siding wall works. What you are asking for is a rain screen system, with the siding attached to sleepers or lathe which is over the weather resistive barrier that leaves a capillary break (small gap) or a ventilation gap (1/2 - 3/4"). A rain screen system is a quality wall system but is rarely built, not demanded by building codes and exceeds requirements of the siding manufacturer. Lap siding on the other hand, is kind of a ventilated system without sleepers do to the configuration of the siding itself but the water still goes between the back of the lap siding and the weather resistive barrier.

Frankly, this installation was pretty good as window installs go, at least around here. Moreover, in talking to other APA field reps around the country I don't think this install worse than most. Now, having said that there were things that could have been better that were noted after the siding was removed. 1) the peel and stick at the top of the window should be under the weather resistive barrier rather than over it and 2) there was no sill flashing--the window sits on the bare wood framing at least at the bottom corners of the window where the angled cut of the weather resistive barrier wrapped up over the bottom window sill does not reacy. A sill flashing is RARELY installed. I'm not saying that is right, but that's the case.

FYI, the house passed all it's code inspections.

Again, thanks everyone.