Problems with power vent hot water heater at condensate exit

[Pmrfin]

I have an AO Smith vertex hot water heater that was installed about 3 years ago. Yesterday we had no hot water and found a large amount of water in the basement. When I looked closely I saw water fountaining from a small hole near where the outlet of the condensate pump is. Water was also pouring into the condensate pump so I know the tubing was not blocked. I turned off the water and shut the power. A plumber came by late last night and turned on the cold water and water again started pouring from the same location. He said that this means that there is a leak in the hot water heater itself and it needs to be replaced. Since it was already replaced once due to a recall, he said it is not covered under warranty. I have 2 questions.

First, does this diagnosis sound correct and do I need to really replace the whole hot water heater or might there be something less major going on in this unit that is less than 4 years old? Could this be a bad expansion tank or something outside the water heater itself?

Second, if it does need to be replaced shouldn't this be covered under a warranty even though it was replaced once due to a manufacturing defective and recall on the part of the manufacturer?

Thanks!

[Webmaster]

I looked at the manual for this type of water heater, I do not see how the water from the water heater can get into the condensation line.
If you can send pictures of your unit, showing what is going on, I may be able to see the problem.
The warranty, issue I do not know, but you should get in touch with AO Smith to find out what is covered.