The dreaded appearance of water in the engine sump started the investigation of the leak. Found the water pump was leaking. In the beginning it was only when the engine ran which was able to live with for a bit until it started leaking all the time.. now I had to do something about it.
Discovered volvo has a rebuild kit so opted to go down that route. I used Nigel Calder's Marine Diesel Engines book as reference, it has a good section on rebuilding water pumps. I dismanted the whole pump and took it home to do the rebuild. Using Nigel Calder's book it was pretty easy to dismantle until you get to the shaft and bearings. The is where I had a lot use a lot of force ie a mallet to remove the bearings.
Fitting the bearings to the new shaft again required a lot of brute force. Was worried about damaging the new bearings. I took photos as I dismantled it so that I can remember how to reassemble. I put the rebuild pump back on the engine and it worked like a beauty. No leaks. In retrospect I am not sure I needed to rebuild the whole pump. I think just replacing the seals would have fixed the problem. So I would recommend replacing the seals first before undertaking a rebuild.