Refer to #1. If the seal is missing it WILL cause smoke inhalation. That certainly needs replacement before going into it any further. Think about it, there is exhaust under pressure in the area around the water pump. The seal on top of the pump keeps that exhaust out of the tube that the drive shaft runs in. If exhaust does get into that tube, it goes up the tube and out the vent hole at the top, which is in the area under the hood. Cough, snort, choke, gasp.
You just cannot evaluate these motors for an exhaust leak properly in a test tank. If you suspect an exhaust problem, take it for a boat ride.
