John, Yes that hole is there to drain the water from around the water pump. The exhaust and oily residue also accumulates there. It is a problem with heavy oil gas mixtures. I call that mess Goobers! Early 50’s motors did not have that drain hole. Motors left out in the cold would freeze up and sometimes break the exhaust case. I have several motors around here that I drilled a hole in that area to let the water out.
Lots of members like to run 16 to 1 gas oil mixture. Some oils make a bigger mess than others. If you run 24 to 1 mixture or somewhere in between the two. It does make a difference in the grey sludge. Biodegradable TCW oils are a must!
dale
