I have a 1978 with a Petter Mini 6 diesel. 
There was water from the stuffing box, and oil in the bilge.
Turned out that the bolts connecting the engine and the transmission were  
loose - probably due to the motion of the single cylinder diesel motion.
 
Now, no oil in the bilge and very little water below the stuffing  box.
 
Bob 
Cat # 3587

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