Timber frame/aluminium windows questions…

[G and J]

I’ve a number of questions swirling round in my head re our windows.  
 

We will have a traditional timber with a block skin downstairs and wood cladding upstairs.  Doors and windows are going all aluminium.

 

I've to date assumed that the outside of the window frames will be more or less flush with the outside of the frame, like this:

Is that the best place to put the windows both thermally and for any other factor I can’t imagine?

[G and J]

J found a post by @ETC “PART 3 -Timber Frame Junction Detail” from which I’ve found:

So it looks to me like behind blockwork I effectively use the windows to close the cavity.  Is that correct?