They're both correct, but the best way is to do both. The two step process is simple. A metal flashing should be installed across the top of the opening at the exterior, and foam or caulk sealant should be used to completely fill the gap between the frame of the door and the frame of the opening in the wall. This configuration will not only be water-tight, but should end up being air-tight as well.

A six-inch by one-inch by one-inch "Z" shaped metal flashing will have to be custom made by a sheetmetal company. The overall length of the flashing should be approximately six inches longer than the distance measured from the outside edge of the exterior trim at the left side of the door to the outside edge of the exterior trim at the right side of the door. Expect to pay about $15 to $25.

The six-inch-wide surface of the flashing is inserted between the exterior wall framing members and the paper backing behind the exterior wall covering (stucco, wood siding, etc.) - this all happens just above the top edge of the upper door trim. The flashing should be centered over the exterior door trim, and should pass each side about three inches.

When in place the flashing resides behind the exterior wall covering, then bends away from the building at about 90 degrees for an inch (or enough to pass over the top of the exterior door trim), and then downward, again at 90 degrees, just enough to cover part of the top of the upper door trim. It will have to be painted to match.

The next step is to create a water and wind-proof seal between the door and house frames. This can be done with a foam sealant. Although the foam is applied from the interior side of the opening the purpose is to fill the outside-most portion (exterior side) of the gap. Once the foam is in place simply install the interior trim and paint or stain and varnish.

Remember to seal all six side of the doors (inside, outside, top, bottom and sides). It doesn't make any difference whether paint, or stain and varnish or a combination of finishes is used, but all six sides of each door should be protected. And don't forget to weather-strip the doors to the frame - top, bottom, sides and middle.

The metal flashing can be omitted, but really is the finest method of installation.