I agree completely. The water pump seal is most likely the problem. Easy to change, and not real expensive. The counter shaft o-ring is the right fix as well. My new bikes have leaked here immediately after delivery, so always swap to a slightly thicker o-ring at the first sign of a leak.
As a note, I have never had a 2-stroke with a cracked head or a cracked jug. I am sure there is no doubt one out there somewhere, but have never talked to anyone with this problem. I would therefore doubt your problem is anything this serious. However, if you find you have one of these issues, post a new thread, and we'll get you to the right folks to get you back on your bike.
Rick