In the driver side rear corner is a box with fuel hoses going in and around it. Above those hoses is a nipple-like deal attached to body sheet metal. Water is dripping out of this nipple at a pretty good rate. I can't see what is on the other side. Any ideas?

 

Let me guess....you just filled-up the windshield washer bottle right? Check the carpet at the tailgate or lift gate....bet it is wet.

 

Carpet is dry though I did not check under the spare tire.
Bit t I thought the WW circuit was on the passenger side.
is the nipple just doing the job it was designed to do?

 

There is a WW connection under the carpet at the rear left side. Have to pop-up the trim piece to access it. Very common for this connection to come apart...it is just a push-on connection of the water line to the rear glass washer.

Depending upon how your Blazer is parked, the water could have just ran towards the left side.

Quick and easy to check.

That canister is the fuel vapor charcoal canister...no water in it. Now if that liquid is fuel...then that is a totally different problem.