1997 E320 Transmission and a puddle

[wchaasiii]

All,

About six months ago I went through a rather large puddle with my 1997 e320. The transmission begins to slip. Today, the garage tells me there is water in the transmission and the damage is perminant and will cost $3500 to fix. I thought these transmissions were sealed. How could water get in? Also, the car has 190,000 miles, is it really worth to fix since total maintenance needed is about $7,000 for re-built trans, rotors, brakes, shocks, A/C, and tires.