Yes, that's lichen and hordes of dead, dusty Asian lady beetles piling up on the window ledge. Eww, gross.
There wasn't the slightest gust of wind that didn't seep through the seams, howling as it entered. It wasn't a problem in the summer so much as the winter when it chilled the house as we huddled in our makeshift bedroom, desperately trying to stay warm. Even before we moved into our house in May 2008, we were up replacing a window to appease the appraiser.
We left the stickers on the window for a while to boast that there was indeed one new thing in the old house. Phew! One thing done, a million to go...
The above windows were replaced (the light blue around it is the insulation), the three windows on the front will be replaced with the last two recently purchased windows and there, Jack's about to fill in the east window with plywood. It'll be painted with tar, covered with siding on the outside and insulated on the inside. In case you're wondering, yeah, it's a lot of work. A lot.
. . . and shove in the new windows! The dining room window had to be shifted over since the previous window was too snug against the new stairs and was off center in the room. It's much, much better now.
It's a shame to lose a window because it cuts out the natural light and any chance for a breeze from that direction but it also helps save on heating costs because it's one less place for any precious warmth to escape.