Our gas hot water heater started leaking last week and we found the leak and repaired it. However, now we are smelling gas in the laundry room. Our question is once you relight the pilot light on a gas water heater, do you leave the dial on pilot or do you turn it to on?

There are normally directions for lighting pilot lights. Usually, you turn it to some position (I believe it is labeled "pilot") that will feed gas only to the pilot light. Often you press the dial in and hold it for a minute or so after lighting. After it has been lit for a few minutes, you turn the dial to the normal "on" position.

I'm a bit worried about smelling gas. There should not be any gas released into the room so you shouldn't smell any -- unless you've been fooling with the pilot light.