Eureka! We're in the engine room! My analysis tells me that if you trace the spinning crankshaft all the way back to its source, you'll find Raleigh's treasure key and sabotage his machine while you're at it.
After infiltrating Sir Raleigh's boat, Sly enters the boat's engine room. Bentley informs Sly that if he can follow the spinning crankshaft back to its source, he will find Raleigh's treasure key. Sly ventures through the engine room, facing Welding Walruses and sabotaging the engine room. Once he finds Raleigh's treasure key, it's job complete.
In this level, there was a portion of the level that had giant spinning machine parts during development. While this didn't make the final game, the machine parts can be seen near the end of the level through a grate in the wall.