What type of engine? Cavitation maybe?

6 cylinder Perkins diesel inboard.

Ouch, kinda sounds like it could be cavitation, it happened to my diesel
truck. It was running fine but loosing coolant and I couldn't find a leak.
Then it hydrolocked, coolant was leaking through the cylinder walls.

A few links to check out, must are about trucks, but I assume it could
happen to boats too:

http://www.freeautoadvice.com/diesel/cav.html
http://www.thedieselstop.com/content...ion%20Analysis
http://www.thedieselstop.com/content...on%20Diagnosis