1997 GTI- Exhaust Water Leak Causing Performance Problems?

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I have a 1997 GTI that has leaking water out of one of the exhaust pipe plugs and depositing water in the hull. I will be fixing it with JB Weld over the weekend.

My question is "would an exhaust water leak cause performance problems"?

Background: This spring, I rebuilt the carbs, replaced grey fuel lines/fuel selector valve, confirmed check valves worked correctly, etc and had it running great out on the lake for 5 or 6 hours. The only problem was a delay in accelerating or more specifically getting up on plane. Going from idle to WOT, it would start accelerating, engine speed would go up to ~4k RPMs and ski would get up to ~15mph, pause at that level for 3-4 seconds...then it would "catch" and RPMs would increase to 6.6k RPMs, speed up to 47mph and it would run fine.

I tried adjusting the LS and HS adjustment screws with the seat and air baffle off and wire mesh filter on but had no success. I was able to reduce the acceleration lag from 3-4 seconds down to ~2 seconds but when I put the seat back on, the acceleration lag got much worse (to 10 seconds) and it started almost missing and would not even break plane. I'm thinking this is somewhat related to the exhaust water leak but not sure.

I read Bill86's "carb adjustment" sticky and he refers to the engine "loading up" but do not know what that means.

Any help anyone can provide would be appreciated!

Well... a water leak in the exhaust will not cause an issue... but if you have an "Exhaust" leak... yes... that will cause all kinds of issues. Without clean air... the engine cant burn the fuel.

If the fuel system is clean, and the carb(s) is/are in good working condition (Verified the pop-off, leak down, and all the internal ports are clear)... then the low and high needles should be set to the factory specs.

It sounds like it's loading up... but since your needles aren't at the factory settings... it's hard to say what you need to do. I would start by putting them back.
Definitely a water leak...but now that I think about it, at high revs there was a slight mist coming out of the engine compartment (i was test riding with the seat off) so it could be an exhaust leak as well. Could exhaust be coming out the same hole as the water? I would think those would be separate passages but I don't know for sure. Are there typical places that exhaust leaks occur? It definitely ran different with the seat on vs the seat off...was like it was missing and the engine wouldn't go above 3500 RPMs with the seat on.

Fuel system and carbs are clean (I also have a 97 GSi also so I got to go through the same rebuild carb/replace hoses & fuel selector/test check valve exercise twice...was thankful that the 720 motor only had one carb, both for ease or rebuilding/syncing and gas consumption @$3.75/gallon!) so I'll definitely reset the low & high needles to factory specs. With a clean fuel and carb, the GSi starts and runs like a champ and the GTI was running well until the hesitation started.

I'll fix the water leak and look around for an exhaust leak and let you know what I find out.

And BTW, thanks for all your help...your presence in this forum is invaluable to all us novices!

One last thing...what does "loading up" mean? Can you describe it in laymans terms?
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