Yes, three tubes is correct for 1968…And yes, you are correct, there is a little bleed there in the poppet valve, so I guess the water will slowly drain off like you said.
Try running the engine with the thermostat cap off again to see if the water flow up there eventually stops like you have reported out of the exhaust relief….If so, it might be time to revisit the water pump, losing its prime for some reason….Are you sure it is deep enough in the tank? Did you have the water pump off when you removed the gearcase?
Does the engine show signs of previous overheating?
I replaced the impeller – that was the reason I dropped the gearcase. Water level in my test tank is up to the middle of the cover on the leg for the shift linkage. So about 3-4 inches above the top of the pump housing. No overheating signs.
