how to cover chip on window sill?

Looks like silicon sealant along the back and sides of the sill so best remove that first as paint won't stick properly to it and it'll look messy.

Get some 80 grit sand paper, and sand down to remove and feather the hard paint edges.

Repeat with 120 grade over the whole sill, then undercoat.
You may need to fill any imperfections if you want a perfect job. If these are pretty small/shallow then a bit of poly filla or similar will do and sand these flat with 120.

Couple of coats of undercoat.

Light sand with 120/180 to de-nib when dry then topcoat.

Re-silicon edges when top coat dry.

 

You will probably find that as you start working on it the remainder of the sealant and surface will break up.

I would certainly remove the clear silicone from the wood work.

I would try and use a proper white flexible mastic. I wouldn't necessarily go for a silicon based product because you aren't trying to seal against water.

One option is run some moulding butted up to the existing trim and either paint brown to match the frames or white for the cill. B&Q have a range of widths and styles and a 2.4m (8ft) length is only a £3-£4

 

As above prep, remove loose paint, sand, fill, sand

Where sill meets walls and frame use acrylic caulk, damp sponge and wipe away excess

Allow to dry (tube will give time details) then undercoat and topcoat. Caulk is flexible and paintable, unlike silicone and I think looks neater painting right up to frame

After sanding and removing loose paint, any bare timber will first need priming. Look at Leyland Primer Undercoat from out hosts. 2 coats of this, a very light rub down and ready for topcoat