This depends on which drive you have. A 1986-1993 OMC Cobra should have a gasket there, whereas the 1994 and up joint venture with Volvo Cobras do not, just the same as a Volvo SX. So if you have up to and including a '93, yes there should be a gasket, but if its a 94 and up no gasket. Looks like you'll be replacing your D/S bellows at least, if not the other one too. Normal for water to be in the lower bellows (exhaust bellows) not normal for it to be in the top (Driveshaft bellows).