To state the obvious, you have a leak. The first thing to check is the level of oil in the crankcase. If it is very high, the repair is probably not easy and the engine should not be run. The next place to look is in the bilge. Any antifreeze? If there is, the repair should be simple. A hose is leaking, a drain petcock on the engine has worked open, a freeze plug has rusted through, etc. If the leak is not obvious, start from where the path enters the bilge and follow it upstream to the source. Internal leaks are possible, but less likely. A leak in the water heater tubing would probably show up as too much water in the heat exchanger - pressure water is at higher PSI than engine water. A leaky head gasket could pressurize the cooling water but it would probably show up as water being pushed out the overflow tube near the fill cap. A leak in the heat exchanger itself is possible, and probably the hardest to isolate. A pressure testing device could be used to check the integrity of the whole system.
