diff -Nur -X/home/thue/freeciv-dev/freeciv/diff_ignore freeciv/server/unitfunc.c air/server/unitfunc.c
--- freeciv/server/unitfunc.c	Tue May 16 01:33:41 2000
+++ air/server/unitfunc.c	Tue May 16 01:36:40 2000
@@ -64,6 +64,8 @@
 				     struct unit *pdiplomat, struct city *pcity);
 static void diplomat_escape (struct player *pplayer, struct unit *pdiplomat,
 			     struct city *pcity);
+static void update_unit_activity(struct player *pplayer, struct unit *punit,
+				 struct genlist_iterator *iter);
 
 static int upgrade_would_strand(struct unit *punit, int upgrade_type);
 
@@ -1762,7 +1764,7 @@
 void update_unit_activities(struct player *pplayer)
 {
   unit_list_iterate(pplayer->units, punit)
-    update_unit_activity(pplayer, punit);
+    update_unit_activity(pplayer, punit, &myiter);
   unit_list_iterate_end;
 }
 
@@ -1874,12 +1876,13 @@
   also move units that is on a goto.
   restore unit move points (information needed for settler tasks)
 **************************************************************************/
-void update_unit_activity(struct player *pplayer, struct unit *punit)
+static void update_unit_activity(struct player *pplayer, struct unit *punit,
+				 struct genlist_iterator *iter)
 {
   int id = punit->id;
   int mr = get_unit_type (punit->type)->move_rate;
   int unit_activity_done = 0;
-
+  int transformed = 0;
   int activity = punit->activity;
 
   /* to allow a settler to begin a task with no moves left
@@ -1926,7 +1929,7 @@
 				      ACTIVITY_PILLAGE, punit->activity_target) >= 1) {
       int what_pillaged = punit->activity_target;
       map_clear_special(punit->x, punit->y, what_pillaged);
-      unit_list_iterate (map_get_tile (punit->x, punit->y)->units, punit2)
+      unit_list_iterate (map_get_tile(punit->x, punit->y)->units, punit2)
         if ((punit2->activity == ACTIVITY_PILLAGE) &&
 	    (punit2->activity_target == what_pillaged)) {
 	  set_unit_activity(punit2, ACTIVITY_IDLE);
@@ -2001,12 +2004,13 @@
       map_transform_tile(punit->x, punit->y);
       check_terrain_ocean_land_change(punit->x, punit->y, old);
       unit_activity_done = 1;
+      transformed = 1;
     }
   }
 
   if (unit_activity_done) {
     send_tile_info(0, punit->x, punit->y);
-    unit_list_iterate (map_get_tile (punit->x, punit->y)->units, punit2)
+    unit_list_iterate (map_get_tile(punit->x, punit->y)->units, punit2)
       if (punit2->activity == activity) {
 	if (punit2->connecting) {
 	  punit2->activity_count = 0;
@@ -2037,14 +2041,72 @@
     return;
   }
   
-  if (punit->activity==ACTIVITY_IDLE && 
-     map_get_terrain(punit->x, punit->y)==T_OCEAN &&
-     is_ground_unit(punit))
-    set_unit_activity(punit, ACTIVITY_SENTRY);
-
   send_unit_info(0, punit);
-}
 
+  /* Any units that landed in water or boats that landed on land as a
+     result of settlers transforming must be moved back into their right
+     environment.
+     We advance the unit_list iterator from update_unit_activities() if
+     we delete the unit it points to. */
+  if (transformed) {
+    struct tile *ptile = map_get_tile(punit->x, punit->y);
+    unit_list_iterate(ptile->units, punit2) {
+      int x, y;
+      if (is_ground_unit(punit2)
+	  && ptile->terrain == T_OCEAN
+	  && ground_unit_transporter_capacity(punit->x, punit->y, punit->owner) < 0) {
+	for (x = punit2->x-1; x <= punit2->x+1; x++)
+	  for (y = punit2->y-1; y <= punit2->y+1; y++) {
+	    struct tile *ptile2;
+	    x = map_adjust_x(x);
+	    y = map_adjust_y(y);
+	    ptile2 = map_get_tile(x, y);
+	    if (ptile2->terrain != T_OCEAN
+		&& !is_enemy_unit_tile(x, y, punit2->owner)) {
+	      freelog(LOG_VERBOSE, _("Moving %s due to transform "
+				     "to sea at %i,%i"),
+		      get_unit_name(punit2->type), punit2->x, punit2->y);
+	      move_unit(punit2, x, y, 0, 0, 0);
+	      goto NEXTUNIT;
+	    }
+	  }
+	/* if we get here we could not move punit2 */
+	freelog(LOG_VERBOSE, _("Disbanding %s due to transform "
+			       "to sea at %i,%i"),
+		get_unit_name(punit2->type), punit2->x, punit2->y);
+	if (iter && ((struct unit*)ITERATOR_PTR((*iter))) == punit2)
+	  ITERATOR_NEXT((*iter));
+	wipe_unit_spec_safe(NULL, punit2, NULL, 0);
+      } else if (is_sailing_unit(punit2)
+		 && ptile->terrain != T_OCEAN
+		 && !ptile->city) {
+	for (x = punit2->x-1; x <= punit2->x+1; x++)
+	  for (y = punit2->y-1; y <= punit2->y+1; y++) {
+	    struct tile *ptile2;
+	    x = map_adjust_x(x);
+	    y = map_adjust_y(y);
+	    ptile2 = map_get_tile(x, y);
+	    if (ptile2->terrain == T_OCEAN
+		&& !is_enemy_unit_tile(x, y, punit2->owner)) {
+	      freelog(LOG_VERBOSE, _("Moving %s due to transform "
+				     "to land at %i,%i"),
+		      get_unit_name(punit2->type), punit2->x, punit2->y);
+	      move_unit(punit2, x, y, 0, 0, 0);
+	      goto NEXTUNIT;
+	    }
+	  }
+	/* if we get here we could not move punit2 */
+	freelog(LOG_VERBOSE, _("Disbanding %s due to transform "
+			       "to land at %i,%i"),
+		get_unit_name(punit2->type), punit2->x, punit2->y);
+	if (iter && ((struct unit*)ITERATOR_PTR((*iter))) == punit2)
+	  ITERATOR_NEXT((*iter));
+	wipe_unit_spec_safe(NULL, punit2, NULL, 0);
+      }
+    NEXTUNIT:
+    } unit_list_iterate_end;
+  }
+}
 
 /**************************************************************************
  nuke a square
diff -Nur -X/home/thue/freeciv-dev/freeciv/diff_ignore freeciv/server/unitfunc.h air/server/unitfunc.h
--- freeciv/server/unitfunc.h	Tue May 16 01:33:41 2000
+++ air/server/unitfunc.h	Tue May 16 00:02:56 2000
@@ -40,7 +40,6 @@
 void unit_restore_hitpoints(struct player *pplayer, struct unit *punit);
 void unit_restore_movepoints(struct player *pplayer, struct unit *punit);
 void update_unit_activities(struct player *pplayer);
-void update_unit_activity(struct player *pplayer, struct unit *punit);
 
 void create_unit(struct player *pplayer, int x, int y, Unit_Type_id type,
 		 int make_veteran, int homecity_id, int moves_left);