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Upon further consideration, I don’t think that’s where the water is supposed to be coming out on your motor. I think there should be a plug there, or else it would spray into the lower cowling when it is installed. I think the water should exit somewhere under the transom bracket, based on watching a few YouTube videos. The water is probably getting hot because the motor is getting hot because the water is exiting the system too early and not going through all of the cooling passages it’s supposed to.
Correct, we took that seal off just to see how much water was being displaced. Also yes this model has a rotor right behind the propellor. Thank you for your response!