Understanding pool light assembly - is there a leak?

[btiwana]

My pool light was not working so I decided to pull it out to do some tests. Noticed that the niche is getting the power so the issue is with the bulb. The gasket had some leaks and water had gone in. Meanwhile I decided to take some pictures to understand the system and noticed that there are actually two wires coming out of the conduit hole. The one attached to niche and a green one which is going inside back into the pool wall (into a black sealing).

1. Is this the bonding wire?
2. Also the conduit itself doesn't seem to be sealed or water tight. Is that Ok to have a wet conduit? I can probably try to seal it with butyl tape before closing but don't want to bother if I don't need to.
3. There seems to be a small leak in the pool and I am loosing around 1/2 inch of water everyday. It's California so already getting a little hot. I have almost finalized the leak to the main drain via elimination method (plugging in everything else and then opening it and taking measurements over a week). Is there a possibility of leak in the light via either the conduit or the black sealing into which the bonding wire mentioned above is going?
4. The bulb that I took out is 120V, 500W. I am thinking of replacing it with a LED bulb. Any recommendations on that?

Thanks!

 

[JoyfulNoise]

All pool light wire conduits are “wet” for a short distance. The conduit typically runs horizontally away from the shell and then quickly goes vertical up to the level of pool bond beam. Then it travels to a junction box either at the equipment pad or near the edge of the pool deck where additional runs are made to the equipment pad. So there is only a small amount of water in the conduit. It’s rare for conduit to leak unless it was damaged.

The niche is bonded independently to the pool shell. The green wire is a ground wire that connects to the niche.

 

[btiwana]

Thanks for the helpful answer! How and where is the ground wire connected to the niche? I was able to take the niche assembly out without disconnecting any wire and it is connected to a different wire altogether.