Yep, that wood looks to be in pretty rough shape, but not yet unsalvageable. There are a number of products out there, any wood filler designed for exterior use should work. Something like
www.amazon.com/dp/B0007ZG9T4/?tag=jpenbackyard-20 is a good choice, but maybe not the most economical. Nonetheless, any home improvement store near you (Menards, Lowes, Home Depot, or good hardware store) will have a range of exterior wood fillers to chose between.
On an unsolicited side note, the weathered appearance of the wood suggests you are going to have a hard time getting paint to last on that surface even with a good primer. This too can be helped by using a strong cleaner, such as TSP (trisodium phosphate). Of course, once cleaned it will need to dry a few days before painting. One can get fancy here and pick up a moisture meter for letting you know when the wood is dry enough for painting, but that's not really necessary.
Also, that alligator cracking I see on the paint suggests there's a decent chance that there's a layer of lead-based paint. So, hopefully you were masked when scraping and sanding.
You fill in the gaps, clean it well, prime/paint it, and I think you'll get another 10-15 years before having to do it again or a window replacement. If you just slapped paint on it now, you'll see some peeling within 2-3 years.
