exterior wainscoting

Hi all, I have a little situation that I could use some help with. I have a customer who has a 2 story cottage that was built aroung the 1940's. It is located on the Connecticut shoreline. It has wainscoting for siding, and a lot of gingerbread trim. There is absolutely no sheathing behind the siding, just tongue and grove horizontal boards that the wainscoting is attached to. There are a number of areas that water leaks right through the walls. The customer wants me to paint both the interior and exterior. About ten to fifteen years ago, she had it painted. The painter told her to have the place sandblasted down to bare wood, and then start from scratch. This is what was done, and now it's time to repaint. I have never painted exterior wainscoting, and I'm not sure about the sealing process other than caulking all the seams first (I'm going to tell her to have the place sandblasted again). I've tried searching all over the net, and I've come up blank! I figured that maybe one or more of you may have run into this before?? I believe that they call it "board and bead" siding also? There is paint/caulk peeling out in between the grooves, and I just know that power washing it wouldn't clean it out. She wants me to give her an estimate, and I wouldn't dare unless I knew just exactly how that I'm going to approach the job. Can anyone help me out? Thanks, P.S. Personally, I don't know why anyone would use that type of siding anyway, but, the place is still standing!!