Don't know whether I can help you much but I will rattle on it's raining and cold outside and boat is at home being midwinter. The Hall effect device i imagine is likely to be most reliable unless there is water in the cavity it is fitted to. I would suggest you don't dig out the encapsulation until all else fails. The most likely problem is in connecting wire damage /corrosion or possibly a failure of the magnet in the paddle wheel. I am assuming you have removed the unit from the hull and have tested by spinning it while connected to the boat instruments. you can get over 10 knots by blowing hard to spin it. With the paddle removed you should be able to identify 2 or 4 magnet poles. ie 1 or 2 magnetic rods although weak as magnets go you should be able to pick up iron filings or see some compass deviation. Check the resistance of the wires going into the Hall effect device there should be something in the order of 10 to 100 thousand ohms on each wire to ground/earth/common wire.
The device can be tested by puting 5 to 6 volts on the supply wire there should be about 2.5 volts on the output wire. If it is connected to the instrument you may be able to identify these 2 voltages at the wiring to the sensor. If you have those voltages then a magnetic field ie rotate the paddle wheel should see the 2.5 volts varying from aprox 2.4 to 2.6 volts as the poles pass. This variation is detected in the instrument to indicate speed.
If you can get a square wave signal source about 10 hertz this could be fed in at about 2 volts in place of the output wire of the Hall effect and you should see knots indicated. If you have a little relay that will operate on 12 volts wire it via contactws so it is self interupting (it buzzes) a feed from the contacts via a capacitor say .1microfarad should also give you knots indicated in place of the Hall effect device.
If the device is bad they can be purchased for about a quid try Maplins. you would have to dig out the encapsulation you would have to do this to replace wiring as well infact replace the wiring if you dig out the encapsulation. The hard part is to fill it all again with epoxy or silicon to keep water out. Don't use acid cure silicon as it can cause corrosion of the wiring.
I had a Smiths log for a long time the original reed switch gave out or perhaps the magnets got too weakI replaced it with a Hall effect device and a small amplifier to electrically relplicate the reed switch. I replaced the Hall effect quite a few times because of water creeping in corroding everything. I don't suppose you had a reed switch not a Hall effect device. if only 2 wires to the sensor that may indicate reed switch. A ohmeter across the wires should show high resistance then low resistance as the magnet passes the switch.
Ultimately I took the whole system out filled in the hole because of constant fouling of the paddle and rely on a small GPS for boat speed. We don't have tides to confuse the result here.
All this is wild guessing from theory and my own experience so good luck PEM for more details if you want. regards will
Thanks for your reply William it was very thorough yet simple enough for me to understand. I spoke to a chap who repairs Marine Electronics and he said more or less the same as yourself and also commented that I might in fact have a Reed Switch. Apparently a Hall Effect Sensor would have three wires to it and I have just the two. If the reed switch is duff where do I go from there or am I just chasing my own tail on this one. I am very keen to get the water speed working as it is part of a matching set of instruments which operate perfectly.
Thanks
Ted.
you can buy reed switches too- £1 or so- maplin & others sell them....as williamh said, the hard part is getting the thing out/sealed in afterwards.
Did this once with a motorcycle electric speedo drive that would have cost £80+ to replace maybe 15+ years ago- took ages as it was all sealed in for offroad use, but worked fine.