Hi Buddy, welcome to Jazz ownership . This problem is common on Mk1's i'm afraid ! The sealant around the rear hatchback welded and seamed joints develop cracks over time and allow water to get into the boot.
You can , as I did keep removing the interior trim , and trying to track where its coming from using newspaper or wallpaper lining paper , cut into strips , to try to get a 'trace' . I even renewed the rear hatchback rubbers, (at great expense). All to no avail .! So after 9 years of ownership and 150000 miles , I found that under the rear floor there is a bracing band that goes from one side to the other. This has a hole in the middle , So fed up with sponging out the spare wheel well , I drilled two 10mm holes in the boot floor level with the middle of the bracing band .
Hey presto , yes , water comes form above but not below , and runs out .
This was my fix , and I'm not saying you should do the same, but on car worth less than a grand , it will stop the damp smell and water surging up and into the rear floors, if the water is allowed to accumilate.