If the window is surrounded by wood trim use a high grade polyurethane caulk to seal all gaps between the trim and the siding and the trim and the window.
How to seal windows with vinyl siding.
This prevents any air leakage.
Vinyl siding by itself does not create a waterproof seal and care must be.
Inspect the area above the leak including both indoors and out.
Sealing these spots with caulking is not possible because the siding must expand and contract freely to prevent warping.
In this video this old house general contractor tom silva shows how to prevent water from leaking in behind vinyl siding.
Many vinyl siding installers do not realize the importance of the house wrap and its job as the sole water barrier because many people incorrectly.
Caulking can be placed behind the j channel during installation sealing the seam between the j channel and the house wrap also sealing the seam between the j channel and the window itself.
In this case the objects are the perimeter of the new exterior wall and the perimeter of the old open space.
Often water leaks at a window result from a breakdown in the connection between the window frame and the wall.
One of the somewhat more complex steps in the vinyl siding process however is installing it properly around windows.
To prevent leaks caulk the window where it meets the exterior siding.
But if done incorrectly it can lend a sloppy amateurish look.
Smooth out the caulk.
Remove the pieces of vinyl siding from around the window area.
Check to be sure weep holes are open along bottom of window openings.