well water storage baffle tank

If you were to check your well tank for pressure and water comes out of the air valve stem Is that a good indication it is watterlogged and needs replacement?

It means the blader has burst and will need replacing time to buy a new tank!

If your water tank is a "captive air" or bladder type tank you should feel air coming out of this valve when it's opened, but not water. If water comes out the water tank's bladder is ruptured and the tank bladder or whole tank need replacement.
If your water tank is not a type that uses an internal bladder to keep water and air separated, OR if the air valve is located not on the water tank itself but at a plumbing fitting near the bottom of the water tank, you may find some water coming out of this valve.