OK, so the seal (assuming 100% operational) would prevent what I just described?

No. But it does help slow the process vs no seal there.

So again, I'm saying that if the gimble bearing got wet enough to make noise, you need to check it out, which you access by taking drive off. Also, water may have gotten into bellows (u-joints on driveshaft are in the bellows) and this requires removing the drive. It's all in the same 'protected' area. IE: protection is from the bellows.

When I first got my boat had the same noise. It was the gimble bearing it some how got water in the bellows. Replaced bellows & gimble bearing noise problem gone.

Mine made almost a whistling sound that a shot of grease stopped.