Originally posted by: iamwiz82
Remove the door and all of it's hardware and trim.
Put in a stud between the floor and header
Put up drywall
That's it in a nutshell. You could also remove the header and short studs and replace them with full studs, but that is a lot of work and really doesn't add anything.
Remove the frame if the frame protrude beyond the wall stud or prevent new drywall to lay flush with the old wall.
Nail new shoe, plate, and additional 2 studs at the sides of the frame to provide nailing surface for new drywall. Additional studs should be place at 16" center because of insulation standard, however you can place it at any interval as you please (24" center is some what common in older construction).
Old & new drywall edges can be bevel to prevent raise/bump above existing wall when tape & mud.
Or, carve/cut a thin paper surface strip off the old drywall and then cut the newer drywall and leaving a thin strip of paper over lap the old drywall shaved off surface. (This method doesn't require taping when mudding.)
Outside wall tend to be finish off with 5/8" OSB or plywood then tar paper over the surface then mesh/stuco or siding.
Good luck!