ICE Water Pump

you mean a coincidence? did they take the car back into the shop to verify the problem? the water pump could go bad at any time, but 78k seems a bit low to me. more likely they didn't properly burp the system and there's air in it.
if the water pump is bad, its either gonna wobble from a bad bearing, or leak from the seal. did they show you what was going on?
"sabotage"ing a water pump is highly unlikely; usually thief shops simply tell you that you need stuff you don't need. they may or may not even do what they tell you needs done. sabotage is extra work. a thief wants to get paid for not working, rather than do extra work hoping to get more work. if you know anyone with a clue about cars, get them to take a quick look and listen. a bad water pump is usually very easy to spot, and so is low coolant.

 

Well, I have 62,000 miles and just brought my 2006 prius into the dealer for the recall and 60k service. They are noting that ICE water pump is leaking "pretty bad" and that my aux battery has bad cell and needs to be replaced. They want $300 for the battery and $270 for the water pump

 

As mentioned, the ICE water pump usually (at least as reported here on PC) ends up leaking around the shaft. This shows up as a blob of pink stuff which you can see hanging around the shaft/pulley.

If no leak, then perhaps what the OP is hearing is an inadequately evacuated inverter coolant loop, and there is possibly still some air in the system. Take a look inside of the inverter reservoir while the car is in "Ready" mode and make sure there are ripples of turbulence in the liquid. If not then the shop needs to get rid of the air in the loop. There have been some reports that even the Toyota trained guys don't get all the air out on the first try.

 

Well, if its not making the "gurgling" noise, then you should be fine. I would put the car on IG ON (two presses of the Start switch w/out one foot on the brake), open the hood and check the inverter coolant reservoir for movement of the fluid. Also listen and look for bubbling. If none, monitor for leaks in the system(s) by looking under the car for liquid. If none, I'd say you are fine.

 

of course they didn't touch the ice pump. its on the other side of the ice and not real easy to get to. if the noise is gone, they just didn't burp it properly. make sure the coolant level is full (cold) and forget about it.

but to answer your question about "believe these guys", you didn't answer my questions, so you need to ask yourself if they did those things i mentioned. if they didn't, the answer is no.