The most likely source if the water leak on a Walter V-drive is the gasket under the top cover. If that gasket is bad it is possible for water that is in the water chamber to get into the transmission through the hole that the dipstick goes through. We almost never see a leak from the oil cooling coil that runs inside the cooling chamber. I would be willing to bet that the leak is at the water chamber gasket.
Indmar Marine Engines
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