John:
I am assuming that you are running the hydrostatics using Weight as an input (as opposed to Sinkage). When Orca3D does a "free float" calculation to find the equilibrium flotation plane, it must start with a "first guess" waterplane, and then iterate from there.
The default "first guess" is the mid-height of the surfaces that you have selected for the computation. If your sailboat model includes a keel, this can lead to the first guess being somewhere in the keel. This results in the calculation of a very small waterplane, which in turn throws off the iteration process (it basically assumes that the model has to sink a lot to gain the required volume, leading to the model sinking).
To correct this, check the box that says "Override initial flotation plane...," and enter the height of a flotation plane that is close to what you expect (or is at least somewhere in the hull).
Also, note that this is discussed in the Support area of our web site, under Top Issues:
http://www.orca3d.com/support/support_topissues.htmIf you have additional questions, please let us know.
Please note that the next release has greatly improved the iteration process, and will most often be able to converge without the user having to override the initial plane with a better starting point.