Sounds sadly familiar. This is the second Karcher washer that went dead on me during normal operation. The first after a kink in the hose for a moment caused it to constantly reset, (grrr-unk noise), but never work again. This time, a K3.68M, and a slight tug on the hose end as I dragged it behind the washer unit to reposition it, caused a leak I would also describe as pouring. It's barely used and I'm hoping it's an O ring, but feel I'm wasting my time taking it apart any more than I already have.
My thought is that they are really made pretty crappy, as I saw a third some time ago out in someone's trash and salvaged the attachments. It's also notable, Lowe's home improvement no longer includes Karcher in their online catalog.
ATF, August 2011