I can't tell exactly how it was originally flashed since it is all slathered up with caulk. The step flashing only gets nailed down to the roof. The flashing that covers the step flashing gets sunk into the mortar joint. I've read that it should be sunk into new mortar on one website and into caulk on other websites. I think either are fine I guess. The contractor said the flashing will be all new. And yes, my rafters near the chimney have some rot which I need to reinforce.