The water feed and drain pipes are metal and are notorious for corroding. It may be the rubber pipe that connects, but have a good look around.

They are thin on the ground second hand and I believe ford don't do them any more.

You can remove them and plug them, and run the turbo just oil cooled like the Series 1. However, there is debate as to if this effects the life of a turbo designed to be water cooled. Just remember to let it idle to cool before you switch off.

Its horses for courses, so you'll have to research and make your own mind up.