Overflow when priming is normal.
As to your water issue I’ve never had one of
these but I do have a picture (I think) of
your motor. It looks like it has a pump rather
than an impeller. Pump systems have 2 check
valves. Most likely one or both are dirty or stuck.
I’ve offered some guesses as to what you may
find. You seem to have the mechanical skills
to understand what you’ll find once you get in
there.
Tubs.
A "Boathouse Repair" is one thats done without having tools or the skills to do it properly.