Casting sand from the engine block is the primary cause of premature coolant pump seal failure. No doubt it's been awhile since the cooling system had a good flush.
This is one of the reasons that heavy equipment have coolant filters. Sand is constantly being released from the block, and the filters keep the circulation of it to an absolute minimum. So when you're talking about $1,200 for a coolant pump, lost downtime, and extra mechanic's time - $25.00 doesn't seem like much money at all. I have one on my little dozer and it works great.
To answer your question; Yes. When a seal goes out sometimes it can look like a faucet turned on... and it will be coming from behind the pulley.