Many thanks to tadpole. I was of the belief that foam is waterproof. In the Aquascape Waterfall and Stream Constructions dvd, it doesn't say that it is waterproof, but it sure does imply it is. I made a point of watching it again and think that Aquascape should make a new one and make the very point that it is NOT waterproof.
Now after tearing down most of the rocks, I have used good old exterior silicone caulking and it appears my problems are gone. I will only be sure when we get a few days without rain, and that isn't in the forecast for the next week. But I am going to continue with the pond area and the main part of the stream.
I must say, that this is not the type of work for a man in my condition, but I'm loving every minute of it.....even going to bed at 8 and sleeping until 6.
I haven't done that in years.