Yeh if that was me I’d cut a brick down and mortar it in as neat as possible to match in with the joint lines, then mastic remaining gaps between the sill and brick (presumably there’s already mastic down between the frame and brick? so can match it with that colour).
They also use it in bathrooms. How hard to remove might depend on what it’s laid on. If it’s on concrete it might be a nightmare but if it’s laid on plywood it might not be too hard get up. You would get down to plywood and rip them both up.
Does the retaining wall have any drainage? Has the drainage being rodded recently? I would start here. If someone hasn't installed any drainage then they're a pillock.PU grouting is one method of plugging such leaks. Other options would be to accept water is very persistent and find a way of dealing with the leak/water.I'd also be having a damn good stomp around the ground above and look for any depressions or soft areas. Water like this transports fine material, gradually at first but with increasing speed and you can end up losing material quite readily (internal erosion). It's probably not the biggest concern from what you've described.Remember that even a 1mm slither of water at the back of a retaining wall is the same as having a lake behind it in terms of the pressure exerted on the wall. If you did seal a mid height leak and end up retaining water to ground level this would potentially be detriment against the existing condition.Grouting will obviously push the water elsewhere.(STD. DISCLAIMER: please don't take ANY of this as a professional recommendation/or otherwise).
A drain (plastic pipe with holes in it to collect water) about 1m down (ish - +/- 30 cm) across the back of the garage then bending 90 degrees to emerge from the soil slope next to the garage might help. Easiest way would be a bloke with a minidigger (£300-500 a day).. You'd need a load of crushed rock/gravel to stick on top of the pipe before putting the soil back on top. Or tank the garage - with a drain running out of the garage door. Or cut a small drainage runnel around the perimeter of the garage floor and let it drain out the front.
Yes, typically you'd lay drainage at the rear toe of the wall, as Tom describes, the construction would be half perforated pipe (perfs up), granular surround and some geotextile to stop the fines moving from the retained fill into the voids in the granular fill. If it's there it'll need to come out somewhere. As I said, have a stomp about above and see how wet things are (and if there's any evidence of the granular material near the surface).If you're not sure how it's built (and you REALLY want to know) then a couple of trial holes behind the wall might give you a clue but it's not uncommon for people to build walls that are thinner at the top. You could also try sinking a long SDS drill through the back at various heights if you're confident there aren't any services although I'm not sure I'd let a prospective buyer loose drilling things prior to exchange! This is loosely what we do with masonry bridge abutments when assessing them with the bridge deck/beams removed but the SDS drill bit is usually an 80-100mm core instead.
I'd maybe just look at tanking first. Sure, drainage will help, and is probably a bit of a diy job, but you'll still have damp walls.
Plenty of youtube vids of french drainage if you're curious to see some interesting French Drain beef
I hope the wall falls down now!