Need some help w/ a broken pipe

At the risk of getting shredded, I've got a problem I need to run by you guys. Was wandering around the house, getting ready to pull lights down and I hear water running. Look around and I've got a stream coming out from under my siding. Pull the siding up, cut a hole in the drywall and I find a grey plastic pipe, 'bout 2" in diameter that was set in the wet concrete stemwall. It's located within an inch of the outer edge of the concrete and had taken a hit from one of the siding nails. The nail hadn't completely punctured the pipe but I think the deep freeze we had here last week caused freezing and the pipe to split at that weakened spot.

I turned off water at the street, drained house pressure and the pipe continues to drain. My boy had just taken a shower so I'm assuming it's a drain line, not a supply line. It's not a high pressured spray which I would think a supply line crack would have.

Trying to keep from cutting the siding, my initial thought is wait for all water to drain out, use sawzall to cut away at base plate and stud to expose more area around pipe, dry off pipe then seal the crack.

My questions:
What would be the best way to seal that pipe? (crack goes down to concrete)
Why was it set in the wet concrete?
Is it indeed, a drain line? (It's located on the outer wall of my third car garage, not close to any supply lines. Water heater's 20' away, washer/dryer are on opposite side of garage, no sinks, tubs toilets are located above line)

Thanks for taking a look at this -

Mac