Well the sheetrock is down and my mess is cleaned up--now that I have a look inside the wall it makes sense. It does look like the culprit pipe is the hotwater pipe out of the water heater. Of course I am not going to be able to get that one fixed today because we will need to drain the tank and move it--I am hoping we can get the new heater early this week.
I've got an 1.5 hours before my friend is here--guess I'll go to Starbucks!
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