Siding J-Channel required? Is caulking flashing a good idea?

I recently had water in my basement. I found the source to be corrosion of the deck ledger flashing because the installers used carbon steel nails through the aluminum flashing to secure the deck boards.

When I removed the flashing, I found that the siding J-Channel, which butts up against the deck boards, was nailed to the flashing as well. There was no corrosion here because they had used galvanized nails.

I reinstalled the J-channel by fastening it to the flashing with galvanized nails, just as they had. Now I am wondering if that was a smart idea or not. I have always heard not to put holes in flashing but there appears to be no other way to fasten the J-channel to the house and I think it would make the house look unfinished without it.

Also, in the demolition of the old flashing, I noticed that they did not use a sealant to fasten the flashing down. With the flashing I reinstalled, I used a waterproof exterior sealant between the ledger board and the flashing and between the flashing pieces to eliminate water pushing in there. Will it hurt the ledger board or house to use the sealant in this location? Can it change the flow path of any water that gets down to the flashing and cause it to somehow get behind the ledger board?

Anyone with experience in deck building, help!