Just thinking aloud here. Are you sure that your are not moving the packing nut when you are tightening the locking nut. Like I said in my first post, it is easy to do even when you think that you are not.
So if I understand you from your posted statements, you can get a decent flow at rest and when the shaft is spinning, but not when the lock nut is brought against the packing nut, correct?
Is this a standard stuffing box set-up (Packing nut, threaded flanged section that goes into the flex tube/bellows, and a lock nut between the packing nut and the bellows) or something different? Does the locking nut also help compact the flax in some way or have a compression seal that seals against the packing nut in some way? This could cause a seal that wouldn't let water out and would be in-line with the observation of drips only when the locking nut is not engaged.
Before the flax was changed, did the SB work with the packing/lock nut properly tightened, just excessively?
If you liked my advice/response, give me some rep points. If you didn't......well what do you expect, it was free.