Framing around existing walk out door in basement
This is a fully trimmed recessed door frame. They are fairly common when converting a garage...



What is uncommon is that ledge at the bottom. I would be worried that trying to chip/chisel that out would damage the door or cause water to leak in from the outside. Once the framing is complete, you could trim the recess like the picture above, all the way down to the ledge. The only difference will be an extended "L" and the bottom to compensate for your 2-1/2" framing on each side. 

Then run your trim around the outside all the way to the floor. This will leave the concrete ledge that will appear to be a step. I would treat it as such and buy an oak tread. Cut out the backside of the tread to fit on top of the ledge and allow about an inch of overhang inside the room. Don't fit it too tight against the door or the door won't slide easily. 

Drill some 1/8" Holes (two on each side and two in the center) in the tread. Then countersink the holes with a 1/4" drill bit about 1/4" deep. Use a hammer drill with a 3/16" bit and drill down into the ledge through the tread deep enough for some 2" Tapcon screws. Clean off the ledge and put some liquid nails between the ledge and the tread and screw it down. A good bead of silicone at the bottom of the door would be smart as well. 

You can fill the holes in the tread with stain-able wood filler. You can then take a piece of 1"x 4" oak and trim it to fit underneath the tread at the front. Sand and stain or paint your single stair. 

All that would be left is to run some baseboard. Make sure you lay some cut off pieces of baseboard underneath the baseboard and the piece of 1" x 4" oak when you nail it in so that there is room for carpeting or tile to tuck underneath it.