Well, the very cheapest repair of the wood probably would not last long. That would be to remove any flaking loose material from the bottom of the siding and paint A LOT of Kilz Original over the rotted area. Maybe 5-6 coats or more. 1 gallon is like $17 and would be more than enough to do this. You are trying to make a protective skin over the damage, so a couple of coats won't do. Then replace the trim. Painted hardboard or even plywood will not last long. I would suggest using hardi-panel 4x8 sheets, ripped to 6" strips. Paint that with primer and a top coat of good latex. For better results, use Ame's Research Super Primer. 2-3 coats of that stuff is probably better than twice as much Kilz. It is a penetrating primer that makes a water proof skin. It is also clear, so you won't see as much primer on your wall. One really good use of SuperPrimer is when you install the trim, paint this clear primer on the top edge of the trim and just 1/2" or so of the siding where it meets the trim. This does seal that area, but better yet, it will make the caulking you use at this transition stick and work for a very long time. the caulking will tend to pull away from plain painted siding. The SuperPrimer will stick to siding real well and the caulk will hold on to the primer.
The skirting is damaged pretty bad near the ground. You may be able to save that by resetting it and then installing Skirt Guard. (links below) You may have to add something to the bottom/back of the skirting to support it. Maybe that plastic lawn edging stuff that comes in brown or green strips. New skirting (DIY) is not all that expensive, so you may want to do that.
This is for sure a shade tree repair, but it could last for years. Here are some links.
Ame's Super Primer
You may be able to get it from Mark at this web site or you could try...
http://www.mobilehomeadvantage.com/sku. ... 223/ID/26/
This is a different product, but does the same thing
http://www.randgsupply.com/Warehouse/Sk ... omtrim.htm
This is what it looks like
This is just my low cost suggestion. Maybe others will pose better ideas.