I was going to say clean all that shit out of there and insulate that cavity, seal it and install flashing. 2x on flush with the sheet rockMount it with the inside edge of the jamb flush with interior surface (Sheetrock). Make some jamb extensions/filler strips on the out side to bring it flush to the exterior surface.
YesYou say sheetrock, but interior. Interior is drywall, so I am confused?
Thanks