I would prefer the windows being flush on the outside.
I cannot find an answer to this anywhere.
Replacement windows for my basement will be deeper (3.25 inches) than the old metal ones I am replacing (an inch thick at most). This means that the new windows will sit rather flush to the exterior wall rather than being recessed several inches like the old ones.
Is there any problem with this?
I don't know the answer to your question, but I know I'd feel better - in this case at least - if it's built of vinyl or fiberglass.
Does the manufacturer have a technical support line you can call? It can't be all that unusual of a question.