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It is hard to say whether the door you have can be saced and reinstalled. It depends on how badly the original contractor messed it up. Something to realize: a properly hung door is not going to stop hard rain either. They aren't waterproof. Doors should be protected by a roof overhang of 4-6' at minimum, more if on the north side where wind often drives rain during season change. At a minimum you need a storm door over the exterior door if not adequately protected by a roof covering.

If the door can be saved and rehung without purchasing a new frame or threshold you could be looking at about $50 in materials (varies depending on the type of interior and exterior trim) plus maybe $200-250 in labor. Some areas are higher. Also, the cost will depend on whether you hire a contractor or just a handyman to rehang the door. Some handymen can do the job and some can't. I would expect about $300 to do the job unless the door is completely trashed.

Labor would be a bit higher in this area (closer to $400) but all of Todd's other advice is 100% perfect regardless of area.

The comment about needing a porch roof or overhang or awning is right on.

However, there are a few things you can do - I have a front door that used to be recessed about 3 feet into the house face but had a tiny entry area, so I pushed the wall and door out flush, and have not yet gotten around to installing a porch roof (this summer maybe ???). Mine has gone about 5 years without a drop of water getting in and zero dampness in the sill wood, with three simple additions to the standard door - these are all things you can do yourself, though the bottom seal requires taking door off the frame to install with some types that screw into the bottom so you don't see screws on the face:

1) drip edge over top of door -

http://absupply.net/CR44640-Door-Fram...

2) bulb seal and drip cap under door (2nd diagram, fits on bottom of door) -

http://www.doityourself.com/forum/doo...

3) bulb type weatherstrip all around sides and top of door frame -

http://home.howstuffworks.com/home-im...

that article shows simple stickyback foam strip - the bulb type works better, but may require striker adjustment due to its thickness.

IF you are planning on putting in a storm door, do that BEFORE the drip cap and door foot drip cap, as not all will fit with all storm doors, especially if the storm door fits inside rather than over the frame. Of course, with a storm door then you should not need the door foot cap, though the under-door seal is still important.

For some reason I was not able to find a good picture of the bulb type weatherstrip yesterday - found it today here -

http://www.amazon.com/gp/product/B000...

Depending on your door frame and width, single or double bulb might be what you need. If you don't know how to adjust the striker plate (to accomodate thickness of bulb) then the regular rectangular stick-on type should work, just not quite as airtight.

You want to apply it as close to the outside surface as possible, so it keeps water from getting into the door jamb area.