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I just posted this as a Q&A:

Mr. Gaiman, my friend and I have a bet going on about correct/common ways to pronounce “buoy.” Would you mind telling us how you pronounce it? (I hope you do not mind me asking you this here. It would just be very fun to turn to my friend and cite you on the matter. I completely understand if you decide to just ignore this silly message. Thank you very much.)

I’m English, with a sort of sloppy version of received pronunciation, so I say something very close to “boy”.

Most Americans pronounce it closer to “boo-ey” (which I discovered as a boy, and not a buoy, listening to the LP of A Funny Thing Happened On The Way To the Forum).

Unless they are advertising soap. http://www.youtube.com/watch?v=GzCe1kxlZm4

Which also does not explain why Americans pronounce “buoyant” as “boyant” and not “boo-ey-ant”

…………

And then I thought, I wonder what Frankie Howerd sang on the original 1963 London version of A Funny Thing Happened On  The Way To The Forum when he got to the line about the “bong of the bell of the booey in the bay”, so I went down to the basement and retrieved the CD and found out.

I learned that line is the same, but that Past the buoy (boo-ey) and through the bay” needed an extra syllable for the English audiences and singer. I imagine that Sondheim rewrote the line himself…

And I am putting this song up here for the twelve Stephen Sondheim/Frankie Howerd/pronounciation nerds on the whole of the internets who will be as interested in the answer as I was.

ArtistFrankie Howerd, John Rye, Isla Blair
TitlePretty Little Picture
AlbumA Funny Thing Happened On The Way To The Forum