Okay, whoever installed the old one was a moron.
This is a three bedroom house that has only had two people living in it at a time for the entire 20 years. The water heater was 58 gallons, enough for a 5 person family easily. When I checked the damage, the upper element was set at 130 degrees (a bit higher than the normal 120-125 recommended) and the lower element was set at........... 80 degrees (the lowest setting).
And we were wondering why we could only get enough hot water for one shower .
So the lower element was never coming on to do it's self-cleaning thing. As a result, the seal was eventually compromised and that's where the water was literally pouring out of. The entire terminal was in fact covered in rust.
I am looking at a Kenmore unit to replace it with, but Sears doesn't open until 10AM.