everyone - need keel solution
I seriously doubt that Irwin used sand as ballast. In the 1970''s there were companies that used various metals cast into cement as ballast and while I have never heard that Irwin was one of those companies, I am conjecturing based on your discription, that what you may have is concrete mixed with iron as ballast. When the iron gets wet, it rusts and expands shattering the concrete and releasing what looks like sand. There are other possibilities here such as sand was drawn into keel by the leaks and when the water back flushes the other way it is washing back out.
In any event, there is really only one sure way to tell what might be going on in there which would be to take a small coring perhaps an 1 1/2" in diameter in the side of the encapsulation envelop. I would take this into the side of the encapsulation envelope perhaps a foot or so from the bottom of the keel.
Assuming that your ballast is not sand and that it is relatively intact, you have a number of issues to resolve. You need to dry out the cavity, find a way to bond the ballast to the encapsolation, find the leaks and seal them. That is not a small order but with any luck at all it is doable to one degree or another.