I have received many calls about siding rot issues. The most popular of these rotting is a product called T1-11, which is very popular. It is a wood siding product that is not very cheep to replace. Regardless of the wood siding type, without proper space from grade and exposure to water elements, it will rot. With exposure to elements such as heat, wind and snow, as well as the water, paint can only do so much. The t1-11 typically rots from the bottom and then works its way up. Properly sealing the bottom edge will help the pours of the wood from being areas to whisk water upwards. In the field of the siding, warping and bulging can occur as well.
When properly installed, T1-11 can be a quality siding option, but does need some periodic maintenance. Properly sealing or painting may need to be done fairly often depending on the living conditions of your area. Caulk around trim and other vulnerable areas should be done once if not twice a year with a good elastic, paintable, high bonding caulk. A very vulnerable area for t1-11 besides the bottom edges, is where the sheets' edges meet and overlap. A bead of caulk can be laid on the under side prior to the next sheet being laid over the edge. This would assure a good bond between the two surfaces. Caulk on the same seam to fill any gaps in the seam after installation.
Another area for penetration of water is the nail indentations. Make sure that these are filled and smoothed flush with caulk as well. Not only will it look a whole lot better, it will help prolong the life of the product as well. Horizontal edges are seemed with "z" flashing which slides over the bottom piece and tucks under the upper piece. Pay special attention to the installation of this flashing. The grooves in T1-11 more often than not run vertically. Some homes will install a skirt trim to cover where the "z" flashing is for a better appearance. The grooves above the skirt must be caulked so that water cannot penetrate between the siding and the trim. Below the skirt trim, leave the grooves un-caulked, as to allow any moisture to escape or breathe properly.
The bottom line is to investigate and think like water when reviewing your siding. Look at all possible areas of penetration and where dissimilar materials meet for areas to address. Water typically moves with gravity, but can be blown into areas with high enough winds. When in doubt, caulk, paint, and make sure all that can be done to eliminate moisture is done.
