Yes, the water filled the room, and the wrenches had disappeared BEVORE I placed them correctly to stop the water.
So: I got the wrenches, placed them incorrectly, went upstairs to check, the water was still on. went back downstairs, placed them (wrong) again and then removed the big thing, so the water would fill the room. Right there 2 wrenches disappeared from the pipes, and I was never able to place them correctly to stop the water and so it just kept gushing.
Either way, I went back a few levels, did it again, placed them correctly right away and finished the game. Thanks.
Mod Comment: sonrisa never followed up (so hopefully that means their problem was resolved) but to anyone else reading this thread, you should know that the current iPAD2 update of Machinarium is at Version 1.2