If you find a chance can you cut away the cover where it is bulging? I have seen many leakers but none that have bulged the cover that much.
Sorry for the delay… here is a follow up.
The new water heater was installed this last Monday and is working well. As with any project it was a comedy of errors…
Bumped the cold water inlet removing the old heater and snapped it off behind the valve (brittle CPVC). HUGE fountain in the garage. Thankfully the house shutoff was close…
The new tank is taller than the old tank. The old vent tied in to the furnace vent. Now that the tank is taller it created a negative slope. Not good…. Had to do a bit of vent work to correct that.
A few minor leaks on my first try… got those fixed.
After that all went well!!!!
Here is a picture of the old tank. Sure enough, it was the insulation and not the tank itself. Still, lots of rust on the outside of the tank. I’ve tried to get the old anode out but it’s pretty solidly fused in there. I’ve hit it with PB Blaster several times but no luck so far. My guess is it’s pretty much non-existant. I’ll be taking much better care of this new tank….
Thanks everyone for the help!