First the water heater is supposed to have an 18" vent rise off the top before the first 90, or as much of the 18" you can get while maintaining a minimum 1/8" rise per foot on the horizontal pitch. Where the vent turns up through the house to the roof, there is supposed to be a tee with a cap in the bottom with the vent connected on the side. Where the vent terminates the roof, it is supposed to be 2' higher vertically than any rooflines or peaks within 10' horizontally. Make sure it has a cap, a proper roof jack and storm collar. The rust may be rain coming down the outside of the pipe from an improper install. And lastly, the pipe size must be appropriate for the BTU's vented into it according to its height.

Did they place a water and ice shield barrier on the edge of the roof to three feet past the wall line? Your roof is not similar, only the material is. Original roof was solid from eave to ridge so any ice formed would just keep backing up the roof without penetrating. New roof is pieces which allow the ice to form and move underneath and then leak in the house.

Thank you all for your responses. Frodo: The original part of the house (built in 1911) is over a full basement. The addition (put on in the 1930's) is built over a crawl space/slab. What I mean by that is that it is built over about 12 inches of the ground, and you can't fit anyone in there. The addition currently houses the small kitchen, a small bathroom, and mudroom. Maybe the best thing to do is relocate the kitchen to the dining room, and run PVC up from the full basement to the dining room directly above. This will keep the PVC heated. The bathroom on the second floor is in the original part of the house. That would need to replaced with PVC as well. I'll probably end up having the water lines shut off to the addition, since it gets no heat and putting PVC pipes would be nearly impossible due to the low clearance of the crawl space, and since the PVC would probably crack under the cold air. I hate the thought of replacing the upstairs bathroom pipes since we just did that (the plumber used copper), and we didn't know about our corrosive acidic water until just recently when we had it tested by a certified water lab. When he did that, we had to rip out the ceiling in the hallway directly below the bathroom, and just got done replacing the ceiling, plastering and painting it. Looks like we'll have to rip it all out again. Either that, or wait until we rip out the bathroom to remodel it and get at the pipes that way. That's a huge expense in itself we don't have the money for right now. I'm going to call few really good plumbers next week and have them come over for estimates. Either way, it's all going to cost a fortune. :(

The direct buried water line from the municipal main or well to the structure is technically defined as the "Service Line" Under the UPC (Uniform Plumbing Code) you may use; Asbestos Cement Pipe, Brass Pipe, Copper Pipe-types K-L & M in both hard drawn rigid lengths and continuous roll pipe. CPVC pipe, Ductile Iron Pipe, Galvanized Steel Pipe, PE Tubing(Polyethelene tubing-commonly called roll poly or black poly pipe), PEX plastic tubing,PVC pipe Under the IRC (International Residential Code) in addition to those materials listed for the UPC, you may also use; ABS Pipe, PB Pipe(Polybutelene Pipe) and PEX-AL-PEX pipe. In the real world, I doubt if you could even find a source of supply for Asbestos Cement Pipe and while it could be said to have an infinite service life the labor & material cost of brass pipe makes it cost prohibited. Prior to the invention of plastic pipe Galvanized iron pipe and ductile iron pipe were the mainstays of the industry, but here again, due to the cost of metals and the high degree of labor required to install them, they are also considered cost prohibitive, not to mention that they are highly subject to mineral scaling that will effectively reduce their working diameters in a relatively short time. It must also be noted that when running iron pipe under a slab the pipe must be machine wrapped and all joints must be field wrapped to the same level of protection. While the IRC does allow the use of PB pipe due to the extrememly high incidence of failure in the fittings there were massive class action suites against it in the late 1980's and early 90's and I don't know any reputable plumbers who will risk using it. PVC, CPVC and rigid Hard Drawn Copper Pipe are approved under both codes, but those are rigid length pipes which would require a joint every 20' and at each change in direction. Understanding that most failures occur at joints it would then stand that a continuous roll material that is free from joints might prove to be a better choice. The choices then come down to PE Pipe (black poly), PEX pipe and roll copper pipe. All of these materials are available in 100ft rolls so you could make your entire run free of excess joints. Roll pipe is also much more forgiving if your trenching is uneven, although all pipe laid in a trench should be sand padded both under the pipe and above it before backfilling. For economy and proven service life my personal choice would be PE Pipe (black poly) with brass barb fittings and stainless steel hose clamps on the fittings but be careful here, in some jurisdictions they require a minimum of 10' of copper pipe in direct contact with earth to insure the water system is electrically grounded and in one jurisdiction near me they require all service pipe to be copper. It should also be mentioned that when copper pipe is run under a slab all joints must be brazed, not soldered. Personally, I braze all copper joints intended for direct burial. If you will submit a list of all the plumbing fixtures in your house, I.E. sinks, tubs, WC, laundry hookups etc, I will be glad to work up the load and determine the proper size of line needed for your structure.