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A survivor of the Hauraki Gulf sinking says he and other survivors are racked with guilt.
Police have been interviewing witnesses and trying to recover the wreckage in order to piece together the tragic events.
Matt Ironside was one of the crew members on board the ill-fated boat and says he is still in shock.
He says the adults were in the water for a long time trying to save the kids and they now feel guilt and self-persecution. Mr Ironside says the boat all of a sudden started taking on water and quickly sank.
Constable Tony Flanagan from the police launch section said the police dive team arrived from Wellington yesterday and filmed the sunken boat as it sat on rocks at Tarahiki Island on the eastern side of Waiheke Island.
"We think we know the reason," he said. However, until a full examination of the launch had been carried out they could not be definite.
"We have found one problem but there may be more than one," Mr Flanagan said.
He would not comment on an earlier suggestion the bung may have caused the problem.
The two children who drowned when the boat sank near Waiheke Island were on their first trip away in the new vessel.
A neighbour told how she saw Erina Rowles, 8, and her 5-year-old brother Travis crawling excitedly over the family's new boat parked outside their Devonport home as their father carefully explained the boat's features.
Less than a day later, the two youngsters were drowned when the vessel mysteriously sank in calm waters in the early hours of Anzac Day.
They died after being trapped in the cabin of the 7.3m aluminium trailer-boat after it began taking on water about 2am.
A neighbour last night told the Herald she saw the boat attached to a 4WD vehicle as the family prepared to go to sea on Tuesday morning.
Deborah Snowsill said the family were clearly excited by the new craft, particularly the children.
"I saw the girl, she was climbing on it and they looked quite happy about the whole thing.
"One of the adults got on and the other was talking him through it. I thought 'maybe he's just bought the boat'."
Ms Snowsill said she initially thought the group was going on a school trip as one adult was "obviously telling them what everything in the boat does.
"I guess that kind of caught my attention because it was a school day."
Police said the Rowles family were "absolutely beside themselves" after the drownings.
Devonport Primary School principal Shirley Hardcastle said pupils had spent the day making cards which would be collated into a book for the children's parents.
A brief assembly was held at the school today, the first day back since the deaths, and a memorial was planned for next week, she said.
The pupils were told at the assembly what had happened, she said.
"It's been a long day and it's one I hope I never have to have again."
Some of the pupils would attend the funeral on Saturday, along with teachers and staff, she said.
Ms Hardcastle said the children had been good but she did not think it had registered with them yet.
"It hasn't sunk in."
Ms Hardcastle last night said Erina and Travis were "just delightful children, full of life.
"They were children who always had a smile on their face."
Ms Hardcastle said she was devastated by the drownings, and was preparing to break the news to students and staff today.
The deaths would have a profound effect on the 300-pupil school that was "like a family", she said.
Erina and Travis were "very sporty children", who were involved in "everything that was going", she said.
Another neighbour said the children could often be seen playing behind the brown wooden fence of their front yard.
She said the family "pretty much stuck to themselves" but Erina and Travis were "happy kids" who were often seen or heard playing in the yard.
Police are trying to establish what caused the boat to sink while anchored in calm conditions.
Four adults on board escaped and swam to rocks on Tarahiki (Shag) Island, southeast of Pakatoa Island.
It was not clear how far the adults had to swim to safety, but the group had to wait until daylight - almost five hours - before attracting the attention of other vessels.
"The family sat on the rock knowing full well their children were on [the sunken boat]," Inspector Willie Taylor said.
While the family were being helped, rescuers found a third body - that of an elderly woman - in the water about 500m from the site of the sinking.
Police last night appealed to anyone who might know the identity of the body, which was spotted by chance during the boat rescue.
"All we know is we have recovered a body of a female, middle-aged to elderly," Mr Taylor said.
The woman - whose death is not connected with the boating accident - was wearing camouflage trousers, a three-quarter-sleeved black top, and a thin gold chain around her neck.
Police did not know yesterday where the woman had gone into the water, or how long she had been there, and were checking missing person lists.
Tides between Waiheke Island and the mainland were strong when they were turning, Mr Taylor said.
Auckland Rescue Helicopter Trust duty crewman Leon Ford said police called for the helicopter about 7am.
It had to hover less than a metre above the rocks to unload paramedic Chris Deacon.
After being that told Erin and Travis were still on the sunken boat Mr Deacon, wearing a wetsuit and fins but with no breathing gear, tried to dive to the vessel, Mr Ford said.
But the water was too deep.
A civilian dive instructor from Maraetai and a helper later recovered the bodies.
"They were happy to help us," Mr Ford said.
"They would have been in the water by 8.30am."
All three bodies were taken to the Auckland Marine Rescue Centre at Mechanics Bay, central Auckland.
Police divers came from Wellington yesterday afternoon to dive to the wreck, and it was hoped the vessel would be re-floated today.
Constable Tony Flanagan of the police launch section said the boat might have sunk stern first.
The bow was upright, and it was in about six metres of water.
He said the family had tried to get closer to the rocks, but the boat sank.
"The stern has gone down and it has gone down vertically," he said.
Workers would probably use air bags to lift the boat, then tow it about 4km, semi-submerged, to the nearest beach.
Investigators would not know if the boat had structural damage, or if there was another reason for it sinking until it was raised, Mr Flanagan said.
The owner had told police he did not think he had done anything to cause the damage which sank the boat, and did not hit rocks when he tried to beach it after the water was discovered.
As police divers prepared for a last trip below, small boats were still fishing nearby, unaware of the tragedy.
- additional reporting: STEVE DEANE, NZPA, NEWSTALK ZB
