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2001 GS water leaking in hull while flushing

Just bought a 2001 GS after a short test drive. At home I noticed water leaking from somewhere while running the engine on the garden hose. I find it is about a quarter of water every 3 minutes of running time so it's quite a lot! Not seeing any obvious leaks from the cooling hoses but i did notice water pooling around the exhaust muffler (which sits above the bottom of the hull on its own tray, kind of).

Any ideas to handle this would be appreciated!

P.S.: It's my first ski! I knew zero about PWCs until may. Bought this one a month ago i found it needed some work: So far i put new spark plugs, all new fuel hoses, fuel tank pressure relief valve (old one was stuck, balloonig the tank), new oil feed line and filter, new fuel switch, new fuel decanter (from mercury outboard, very similar to the OEM one) and rebuilt the carb. Also installed generic sleek mirrors and aliexpress tachometer and gps speedometer.
 
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Just a friendly suggestions, I wouldn't run the ski for that long on a hose. Nothing is cooling the "driveline" and it can and will get really hot and may break on you. The hose is for quick flushing and diagnostics in short increments.
 
Thanks for the replies! I finally took the muffler out and it's worse than I thought! It's way worse than i thought as there are several holes leaking exhaust and water from the lower half of the muffler (as imprinted in the rubber muffler cover yellowish padding).

It seems to me that this sort of spongy padding gets soaked with water and causes the corrosion from the outside as there are several littles holes in the making.

Any suggestions on how to handle this guys?
 

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