Several options can be considered for flashing the roof to the wall.
First option depends on the structural integrity of the existing wood siding and where it was nailed.
From doing the tear-off of the old layers of shingles, there should be at least a slight gap, if not larger from the bottom edge of the lowest clap-board piece of siding. If there is enough play, then carefully using a very small baby pry bar, enough room can be gained to slide the baby tin step flashings into position.
Second option, is to install the baby tins to the exterior of the wall and then make individual sections of counter flashings, which would then need to be mitered at the top edge as the slope of the roof makes each piece attempt to jump up to the next row of siding. You would want to trim off the metal, just shy of the bottom of that next row. Preferably, a bend will be made into the sheet metal for strength and possibly also as a caulk ledge receiver. Prior to screwing the sheet metal into position, a bead of NP-1 caulk should be inserted behind the flashing, so that it has a solid compression seal behind the metal as well as the top caulk receiver ledge. Some people use a foam backer rod as the compression seal also.
Third option, which I find to be the best option many times, is to snap a chalk line at the height of o 1" x 4" cedar board. Cut away the existing siding below that snapped chalk line. Install the baby tin step flashings as normal, since there is now no siding prohibiting it's usage.
Buy 10 foot long sections of aluminum Z-Flashing and install the high portion behind the remaining siding. (A Z-Flahing looks like a straight piece of metal, like the back rest of a chair, then a 90* bend for the next section of metal protruding out, like the seat of a chair, then another 90* piece of metal continuing on downward, like the front leg portion of a chair) Now, install the cedar 1" x 4" plumb against the wall and make sure it is tucked behind the leg portion of the Z-Flashing, Pre-Drill pilot holes in the Cedar so it does not split and crack.
Then screw it in place. As a final step before screwing it in place, you can also cut a 45* angle on the top edge that will tuck in behind the leg portion of the Z-Flashing to ensure that any water travelling down the wall will not have a wooden ledge to settle on.
The cedar should be stained prior to installation to either a color that matches the shingles or to a color that matches the color of the wall siding.
One of those suggestions should take care of any of your wall leak concerns.
Ed