250-500cc Water in oil...still

I'm about to have a conniption fit. Got water in oil. No one local had the seal so I went to a seal and bearing house and got a double lipped seal with the same dimensions and polished up the spacer. Water in oil. So I order from dealer the Husky seal and spacer, put it in and WATER IN OIL. I didn't even start it. I purposely did not put oil in it filled the radiator and left it overnight. Pulled the oil drain and out came about 1/2 to 3/4 of on ounce of water. It would probably have been more but with the cap on it would pull a vacuum. Anywhere else they can get water in trans? It is an 11 wr300 with about 100 hours. It runs great but does seem to smoke a lot when started for a minute or two. But the plug doesn't look like it has water.

Are you installing the little oring that goes behind the impeller on the shaft?

I am installing the o-ring between the spacer and bearing. (kinda fits into the end of the spacer/sleeve) Did I forget one?

Yeah that sounds like it. I did mine a year ago and had water in the oil after replacing everything. Took it back apart and the oring was gone. I must have torn it reassembling it. I installed an o-ring from a master link and it's worked fine for a year.

Did you repeat the drain procedure again? Just to be sure it wasn't just residual water in the transmission? When I put my impeller back on the shaft I tightened it as best I could with a pair of channel-locks and a rag to protect the fins. I didn't put very much force on it after hearing that they're kind of fragile. I suppose that if it weren't tight it could leak around the spacer o-ring.

I didn't even put oil in it. I filled with water and left it overnight. Pulled the drain plug out the next day and water came out, about 1/2-3/4 of an ounce. I then pulled the small clutch cover and clutch and pressurized the cooing system and could watch the coolant drip from the shaft. I put a 14mm seal in it now and it is all sealed up. I don't know how long it will last, but it is easy to check the spacer. Someone on TT said I put the seal in backwards, that the curved metel side goes towards the water. I would swear that it didn't come apart that way, but maybe that is why it failed so early.