Water in lube oil is not good for many reasons. Water is a poor lubricant and it can damage the additive package which governs the oil properties. As a result, that damages the lubricated components.
A typical limit for water in lube oil is 200 ppm. Where I work, anything above 200 ppm would raise a flag. For sure, most applications would consider 1000 ppm too high.
Catastrophic failures of heavy-duty gearboxes can happen even when the water is less than 100 ppm if there are other issues and they were not attended on time. What I mean is that establishing a causal relation between a catastrophic failure of a gearbox and a lab oil analysis showing 1000 ppm is not granted. I hope you'll not conclude that the root cause of the gearbox failure is the presence of water content in the oil.
If a gearbox has failed, it is important to collect facts from different aspects. Sometimes, the analyst finds major deficiencies during the troubleshooting but they may not necessarily be the cause of the failure on hand.
If you share more details, perhaps some of the members here would help.
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