Re: Water in the gear oil
The gear oil usually doesn't leak when sitting since it is pretty thick stuff. The theory is that when it is running the gear oil heats up and the resulting positive pressure pushes some out any leak it can find. When the motor stops the cooling action creates a vacuum to pull in any water it can. The movement of the gears makes for a nice blender action to make for a nice milkshake type color. Give it a few days without use and the water should seperate out and flow to the bottom again.
In any event, you could simply refill it with good gear oil and put on new drain plug washers, run it for a few hours and hope that somehow the ones you had on before didn't sit right and that was your only problem. You could also drain all the oil and either do a pressure/vacuum test yourself to find the leak or get your dealer to do it. They shouldn't charge too much for just the test.
Or you could go for a total re-seal job. Not a fun job, so I personally would want to know the results of the other two, first. A little water for a small amount of time will not hurt the motor too much. Obviously the oil is there to keep the gears from grinding down and although you do have some water in there, you do still also have some lubricating oil as well. Not a good condition, but it shouldn't hurt the motor in a short time, while you run the drain plug seal test. A couple of hours of use (run for a while, sit for a while, run for a while, etc.) should confirm the leak.
