Water in the oil filter

Greetings to all,

just bought a 2005 Rinker 25 foot with a 350 mag mercruiser engine and a bravo III out Drive. The mechanic that tested the boat for me was also hired to perform the first service. When he removed the oil filter, a brown mud came out. Water in the filter! We checked cylinders, spark plugs were good and dry, compression was between 125 and 150 to the eight cylinders. Could it be a leak from the exhaust? Any other ideas? Thank you.

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