Thanks Nico,
I had no idea it still had water resistance with the crown unscrewed. My dealer had said water resistance might be an issue if the crown was faulty. Maybe she was just being cautious. The guy I spoke to on the phone at the Rolex service centre was very nice and said that he too thought it could be an issue. Either way, I'm sure Rolex will repair or replace. If it gets fixed to my high standards, they can expect A LOT more business from me!
Regards Joseph-John.