I doubt that the problem has much to do with the crack. It's more likely that water puddling on the concrete is migrating under the sill due to long-term damage. A solution is a little difficult due to the design. Has your husband dug all the way down to the bottom of the retaining wall opposite where the water comes through? I'd like to know if there is drainage pipe installed there and whether the drain is functioning or clogged.

Kudzu, thanks for your reply. He dug down,but not to the base of the retaining wall. There is no visible drain exiting the wall, although I suppose there could be a french drain? When he digs, what should he look for? And what do you anticipate he would see and need to do?

I'm adding a couple of more broad views of the area in case that is helpful.

It looks to me like when the dirt behind the retaining wall gets saturated, it leaks into the garage. Maybe remove all the dirt from the garage wall, waterproof it, install drainage, and backfill it with stone.

If proper drainage was installed when the house was built, he would likely find 4" drainage pipe in bed of gravel. You would not typically see any visible drain exiting in that area. The drainage pipe would ideally be connected to a storm sewer connection that could be quite a ways away from that point and you would not see evidence of it as it would be all underground. It's hard to tell from your second set of photos, but do you get water running down the driveway toward that problem area when it rains? Or is it just a problem with the water that comes through the retaining wall?

I agree with Joseph Corlett's observations and suggestions above.

Kudzu and Joseph Corlett, he said that when he dug down he saw gravel. He didn't dig into the gravel, but assumed it was surrounding a drain. That area of the driveway does have water that doesn't flow away well during heavy rain. Not tons of it, but it is definitely the least well-drained section of the driveway. The driveway was installed about 8 years ago and it is better than before, but still not perfect.

So, if he digs down and finds the drain, would you expect it be clogged and need to be removed and replaced? Would it be possible to tie it back into the existing line to the storm sewer (assuming it currently is)? Also, what type of waterproofing product or process do you recommend when he digs it up?

Thanks again for your advice.

He should see if there is anything in the gravel...like a drain pipe. If there is one, it could be clogged or it may not be connected to a system that would lead the water away from the house. If there is only gravel, then that is a problem. Have him dig some more and report back.

Run gutter somewhere else if possible, convert hole in ground into a floor drain, properly flash and seal base of exterior in that corner.