I've got an old Allience 501 hot water heater. It's pouring out water out of the top of the water heater. The exhaust vent has four legs on top of the heater. Two of the legs are screwed down and the other two legs have little taps that fit into little holes on the top of the heater. I popped one of the legs out with the tap and sure enough the water is coming from the hole for the leg. Not sure what to do at this point? Does this mean there is an internal leak in the tank and the water has just taking the path of least resistance to get out?

Help please!

Those spacer legs are screwed to the cover, not the tank. No water dripping out the bottom? If heater is that old, consider it time for a replacement.

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Does this mean there is an internal leak in the tank and the water has just taking the path of least resistance to get out?

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The short answer is yes, time to replace the heater.

Not so fast with the replacement. How old is the heater? Have you checked the inlet and outlet for a leak in the threads? This might be as simple as wrapping the threads in Teflon Tape and Reinstalling the brass nipples. Just a thought. Tom

It doesn't look like the inlet or outlets are leaking. The water is actually bubbling up out of the hole where the spacer leg connects.

Then it sounds like a weld in the boiler has opened up. You have no choice but to replace the heater, Good luck, Tom