to square one. The water should exit between the shaft and the packing nut. Not the locking nut.
If it is sumthin ie really FUBARed. So I would like you to go to this site by Mainsail. He was gracious enough to share his knowledge ( so I don't have to do it) and do a write up of stuffing boxes along with other stuff. Sort of a Stuffing Box For Dummies approach. Follow his steps and you will have no problems. Re-Packing A Traditional Stuffing Box Photo Gallery by Maine Sailing at pbase.com