Thanks RAD,
we have the hurth short profile sailing gear trans - as for the water, the current observations are as follows:
-The engine is mounted at about 8-10deg angle, so water shouldn't be flowing up from the stuffing box.
-There's no visible sign of leaks from the base of the cockpit to drip down (even checked w/ scuppers plugged in the rain).
-No sign of water in the engine oil (no milky discoloration)
-Changed engine oil, after several hours of runtime no discoloration
-After a fresh trans. fluid change, signs of water in the transmission fluid after running the engine for a few hours in gear
-No sign of head gasket failure (no significant white smoke in exhaust on startup or after warm up and thermostat open)
-There is a pint or so of new water in the engine tray after a several hour run.
The current theory is there must be a small leak in the heat exchanger to the engine block - small enough that the amount of water in the oil is not enough to significantly discolor it after a run, but still enough to accumulate in the sump after cool down - b/c the engine is on an angle its enough to get past the 30yr-old main seal and into the tranns. (where the small amounts of tranny fluid involved are easily showing the signs of water).