I am really surprised that it runs at all with the flywheel removed. The weight of the flywheel supplies the momentum needed to keep it rotating between compression strokes,
You better hope you don’t see any water coming out of that curved tube. That tube is the crankcase puddle drain. It drains off any excess fuel that may collect in the crankcase. Water in the crankcase would be a bad thing.
There is no telltale as such. Water pump working indicator is water droplets blowing out the exhaust relief slots or holes about half way down the backside if the leg.
