So my current boat that I just got late last year was taking on water at a pretty good clip. I just dealt with it for the fall but now I'm trying to get that fixed before I put it in the water for the summer.
Here is my work space. The garage isn't quite long enough to fit the whole boat and spring time in Michigan is wet, so I didn't want to take all the shrink wrap off, so I cut a slit and am working under the covers. I tape a tarp over the opening while I'm not working to keep the water out. The tower is folded down and it in a really bad spot for working on the boat, but it's not impossible to work. The lighting is weird under the blue shrink wrap - everything had a blue tint and some things even glow like under a black light. My boat also has red stripes on the upholstery and those just appear brown since hardly any red light gets through to be reflected.


I was pretty sure it was leaking through the "water box" (technical term: Hydrophonic Dampening System). The box is supposed to fill up with water. But what it's not supposed to do is leak that water into the bilge. The water box is that rectangle box between the mufflers. The prop shaft goes through it and I guess the extra water is supposed to dampen vibration.

Apparently it's a weak spot on these boats, especially as they get older. Reading the Malibu forums, they said how to check for the leak. While the boat is on a trailer, put all the drain plugs in and fill up the bilge and see if water drops out from where the prop shaft goes through the bottom of the boat.
There are a few likely area where the water could be coming from:
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The shaft seal
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The rubber hose that leads to the shaft seal
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The lid of the box
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A steering knuckle that is anchored in the box
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The actual fiberglass molded box itself.
You can see the water I have in there in the above picture. I slowly filled up the bilge to see if I could kind of isolate where exactly it was getting in. Once I got it fairly high, it did start leaking out the prop shaft, but I couldn't isolate where it was getting through.
I don't think it's the molded box itself or the lid. Those both looked good. The shaft seal is getting old, but since there wasn't water pouring out of it last summer when we were looking I don't think it's that (plus, the shaft seal is supposed to leak a little bit).
That leaves the hose and steering knuckle.
I loosened the hose clamp on the hose and turned it around and found this.

Hmm, looks like a bit of rot. Can't guarantee it's leaking there, but it's looking likely.
I filled up the bilge until the steering knuckle was covered and starting hearing gurgling/bubbling noises. That's a pretty good sign that water is leaking. Plus, I don't know how loose the knuckle is supposed to be, but it has fairly excessive lateral movement which isn't a good sign.
Here is a picture of the knuckle

So it's possible I have two leaks. I guess it's time to open up the box and find out.

Well, there were two spots of water, one near the back (near the steering knuckle) and one near the front (near the black hose). So I dried out the box and filled up the bilge again and fairly quickly I noticed water in the box coming from the shaft.

I wasn't able to isolate the steering knuckle, but after hearing the gurgling when the box was sealed, and seeing water in the box in that area I'm 99% sure it's leaking, and since I have the box open, I'm going to replace that mechanism since I don't want to have to redo this.
The steering knuckle should be easy, it's just bolt with some washers and I'm assuming some rubber washers too. There is evidence of what used to be rubber washers between the metal washers, but they're basically disintegrated. I'm hoping the Malibu dealer can help get those parts.
The hose is going to be MUCH more involved. I have to disconnect the prop shaft from the transmission output shaft and then pull the mounting block off the shaft so I can get a new hose on. Usually the shaft is pressed into the block so hard it takes a puller to do it, and I'm not sure I can find one. My friend built one for his boat, but we're not sure if it'll fit on mine. While I'm doing it, I'm going to replace the shaft seal since it's super easy at that point, and I have no idea how old the current one is, and the new seals are virtually leak-less and reduce friction.
I'm hoping to get this done this weekend, but it's going to depend a lot of if I can get a puller for the shaft and if I can get any necessary parts from the dealer. It'll most likely be next weekend by the time I get it all done though. I can't wait to get the boat in the water.
Also, [Zoolander] No one makes me bleed my own blood[/Zoolander]

It's funny, I almost never wrench on anything. I love designing, but I hate wrenching. But I'm trying to save some money, and I don't think this will be that hard. I'd much rather do this than work on the car because here everything is either stainless steel, aluminum or fiberglass. The thing that gets my blood boiling is rusty fasteners that are seized and end up stripped.