Oh goodness, yes.. We had problems with the waterfall as well. The pond
came in absolute horrible quality when we moved in; nearly as bad as it
was in the first picture, save for for times as many fish. Ended up
just building a bypass with some old PVC and tubing, but that was ages
ago... more pictures, more progress!

It turned out that the waterfall they built wasnt protected against
leaks of any type, but more rather a giant rock mass cemented together.
It wasnt on any sort of liner, and hence water would simply drift into
the soil. Of course, you've also seen the state of the liner underneath
the pond; cracked beyond all belief. The liner wasnt doing anything
useful, whatsoever.
http://img252.echo.cx/img252/4719/dcp007633oq.jpg (the pond, as close
as the original condition as possible. I believe there was a little
giant pump with a shoebox sized prefilter along with a brick of barley
to boot. The main filtration is now the holding tank's filter.)
http://img142.echo.cx/img142/9930/img02101em.jpg (the original hole
that caught our attention)
http://img134.echo.cx/img134/9948/img03122lh.jpg (More pond progress.
Those chunks are quite heavy.. I need to pulverise them each
separately)
http://img134.echo.cx/img134/2263/img03152jb.jpg (Holding tank water,
now Chamomile tea color. I hope this doesnt last, but its a great jump
from chocolate cream.)

I'm getting through this cement at about two square feet a day. I
should be done by this Friday, leaving ample time to excavate. In the
mean time, I'm trying to decide how I should keep such a disaster from
happening again, and have been planning on building a filtration system
that consists of a homemade bead filter, homemade "bioreactor (large
tank of large surface area material), and a plenty-large homemade
vortex.

Water quality in the small holding tank is also degrading quite
rapidly; I believe its going over its first bacterial bloom. The fish
are atleast eating now, which is nice..

Thanks for your help! More pictures, content, more updates on the way.