Replace drywall around window frame in stucco home

I have a stucco home which got water damage where a blind is hung inside the window on both sides and at the top. The water damage came from an exterior leak from a window above and repairs to that will be completed when the rain stops. My question is how the edges of new drywall should be finished, assuming I can see how to attach it once I tear out the old damp drywall after the leak is fixed. I have read about tape on seams and drywall mud and tape in the corners of rooms but nothing about the edges of drywall where it meets other drywall with an outer corner instead of inner such as where the inner top edge of the new drywall will meet the vertical wall above. Which one overlaps, the vertical wall coming down with the new drywall nested inside it? And do you also put tape on an outer corner such as this one above the window? This will be my first attempt at drywall replacement but the house is for sale for much less than we paid for it and I need to do it myself. Thanks for any help or suggestions.

 

I'm not sure I understand the question compleely. Corner beads are used for outside corners. Can you post some pictures to photobucket?

 

Ya, if I understand correctly, corner bead is what you need for outside corners. It will only need tape where the side meets the top [inside corner]

 

Thanks -- I got a piece of corner bead, tape, mud, and some scraps of mold resistant drywall yesterday. By this weekend I will tear out the old drywall sides and inner top of the window frame and see what it is attached to (metal or wood) before I get drywall screws or nails to attach it (although I guess you could use screws in wood too). I have sealed the window above so I should not get any more leaks. I'll let you know how it goes!

 

Screw are usually prefered because they have better holding power - less likely to come loose. Screws for wood have coarse thread, metal has fine thread.