If your selling you might just want to take your chances and let the next owner deal with it. It's difficult to tell a non-professional how to install something we can't see. From the OP, he never mentioned a steel pan system, so I'm not sure if he's talking about leaving the steel pan in and installing on top of that - in which case the pan will still transmit cold from the outside to the inside. However, he might be talking about leaving the narrow steel frame of the casement - sometimes these are finned into the block walls, sometimes screwed into a hidden wood frame. If they are finned they can be a nightmare to remove. I can see that if this is the case, and there is no steel pan, that the opening could be lined/framed with 1x6 or 2x6 and then the new window installed in the wooden frame. Then the exterior could be wrapped with aluminum over the old steel frame. Hope I didn't just confuse the whole issue. Trying to understand what is existing. If there is indeed a steel pan system, I would definitely remove that by tugging and cutting and get it out. Though I've seen it done with it in, and it is a heck of a lot easier, it isn't really the right way to do it.

No, the windows are completely rotted out in their casings. I suspect that this is from some landscaping we had done about 12 years ago where the ran the sprinklers on a timer and they continually hit the house directly on these windows. Here is another picture where you can see the whole window has sunk into the sash so there is a gap at the top. What window brand do you recommend?

Most people change their windows because of style changes. Single pane to Insulated glass, white frames to black, casements to double hung, etc. If you are happy with your windows, leave them alone and do what you are doing.

It's hard to tell from the pictures, but there has to be a way to get to the screws. I have done many of them and each one is different, just take your time and see what needs to be done to get access to the screws. Is the something that tells you who is the window manufacture? If you open the window, usualy there is a sticker on the top or side of the frame or a stamp on the glass in one of the lower corners.