Are there any trees on the dam? Brush? What about animal holes?
Odds are that if it just started leaking, than something dug or grew through it.
Wait until it stops leaking. The water will lower to the point of the leak. Then you'll have to do a very careful search to see if you can find where the water is passing through. Odds are that you wont see anything, but you never know.
If you don't find a root or something obvious, than your'll have to seal the whole dam at that level, just above it and just below it. From what I've read, Bentonite is the best thing for this. It expands when it's wet and is the prefered material for sealing leaks.
You spread it over the area and mix it in. Use a roter tiller or a shovel and mix it in real good. Compact and hope you put enough Bentonite into the soile.
That's what I understand, but I've never done it, so I'd suggest you go to
Pond Boss Magazine Home Page! and search through there forums. They are the experts on ponds like this site is on tractors.
Good luck,
Eddie