I'm no physicist or electrical engineer, but I do know a fair amount about magnets. I can only see two issues that could arise from magnetized wire and both are fairly theoretical.
1(and the more serious of the two): If the wire is in close proximity to the compass, it could produce false bearing readings, which could be dangerous for a off-shore cruiser especially in event of a gps failure. Same thing applies to a generator too close to a compass. However, if the magnetic source is only slight and outside of a few feet, it could well have no effect whatsoever. And as Paul said, a decent compass adjuster can clear this problem right up.
2: Magnets can form a basic current flow which over time could lead to electrolysis (the transfer of atoms from one metallic object to another via an electrolyte) If the boat is used in saltwater, seawater between the wire and the fittings could theoretically assist in this transfer (acting as the electrolyte), leading to degradation of the metal. Thing is, it would likely take years before this would occur to any noticeable degree, and the rigging would probably be way overdue for replacement by then anyway.
The only solutions to issue 1 (if it is indeed an issue on this particular boat) would be to relocate the compass or replace the wire. Issue 2 was presented only as general information and can (and should) be ignored.
As for the cause of the magnetism... In addition to the suggestions already put forth by Paul, the owner could have attempted to clean the wire with steel wool or a similar metallic abrasive, which can magnetize a rod, or wire. Another more likely cause could be a lightning strike in the vicinity of the boat (or striking the boat itself?) the wire could possibly have been magnetized that way.
One more thing to check for is an actual electrical current in the wire which could be caused by a bad ground contacting part of the attached metalwork. Any current running through a twisted wire can generate a small magnetic field. It may not be enough to feel the current in the wire (especially if it is DC current coming off the battery) but would be detectable with a multimeter. This is more likely in a steel hulled boat, but still could happen in a glass boat.
If any of this is incorrect I apologize, but as I have said, I'm no expert.
In any case, the spool of wire is likely not the culprit but can be easily tested with a bit of iron filings.
If you noticed a lot of "could have's" "theoretically's" and "likely's" in this post it is because, as RC said, there's probably nothing to worry about. Except of course the customer's peace of mind.
Last edited by kazmeister; 02-22-2006 at 08:25 AM.