Dry rot is not really dry; it’s a fungus infesting wood that is repeatedly in contact with water. Sometimes the fungus itself is visible; more often, the wood surface is brown and crumbly or whitish and spongy. The rotten wood may yield easily to the probe of an ice pick, or it may sound hollow when tapped with a hammer. Replace or repair rotten wood quickly so that the fungus will not spread.
Look for dry rot in wet basements, near plumbing, and in wood that touches the soil or is exposed to weather. The fungus usually enters at the end grain-the base of a foundation post, the joint of a beam, the place where the window frame butts against the sill, and so forth. Pay particular attention to the windward side of your house; wind can force rainwater deep into a joint or crack. Flaking or discolored paint are symptoms.
Structural members of a house are usually difficult to replace; call in a professional for such jobs. You may be able to fix window sill, door frames, porch rails, siding, and the like by cutting away the affected area (plus 6 inches on either side) and splicing in fresh wood, but it is generally better to replace the whole piece.
Carefully saw or pry the old part away, keeping it intact if you can, for use as a template. Check that the area beneath is not affected. Then make or buy a new part and fit it into place.
If dry rot has infested a small area, you can often repair it with an epoxy resin, available in most boating supply stores. Drill several 1/4-inch holes deeply into (but not through) the affected wood. Then mix the two parts of the resin in a plastic squeeze bottle, and inject it slowly into the holes. Over the course of several days, the resin will seep into the pores of the wood-in effect, replacing the decayed wood with plastic. Add more resin as the first dose soaks in. Finish the job with an epoxy filler.