I did not apply sealant to the plate or the base of the water pump housing. I will try that. There is no evidence of old sealant there.

I am confident that the water tubes are properly seated and that the tubes themselves are in excellent condition. I have had the lower unit of repeatedly trying to sort this out and have been very careful with tube alignment each time. The water tube grommets are new (top and bottom of the supply and return tubes) and are nice, soft rubber. I believe that they are sealing well.

Thanks, Im happy to dig into anything that anyone can suggest at this point.

A little history.
This motor was/is my fathers. He picked it up used maybe 35 years ago. We used it fairly regularly without issues until about 15 years ago when the arm on the throttle broke. Ill get the name wrong, but its the short plate that is peened onto the endo of the rod with the butterfly plate. the plate broke in half at the locking screw. It sat for a few more years and mice got in and made a real mess under the hood. wires and hoses damaged. corrosion from waste. It was taken apart at that time and sat in boxes until this summer when I got sick of walking past it in that state. I repaired the broken part and put the rest of the motor back together. It seems like it is going to run fine. It needs tuning but I have not dared run it long enough to get to that yet.

This motor has seen salt water and there is corrosion on the lower unit. There is also minor pitting on the impeller housing. None of the sealing surfaces of the gearcase, impeller plate, or impeller housing are compromised, I just sealed them together last night so can do another test today. The worst corrosion is around the lowest intake screen, the rolled up part. I will inspect that area closely to look for any direct connection to the exhaust side. Someone appears to have knocked off and welded on the intake side (port) of the ventilation plate. Its a little ugly and some weld burn in has created a few voids around the intake plate that would allow water to go around the plate/screen instead of through. This is unsightly, but I did not think it was a functional issue.
The water pump screws and their holes all look and feel good and original. The shaft has a slight polished groove where the impeller seal rides but not enough to concern me.

As for determining that it stops pumping, my concerns came from lack of any water spit at the exhaust relief (seen in youtube videos of this vintage motor, not 1961 though) and the general feeling that it was getting too hot (based on touch and how quickly water steamed off the block)
I removed the tstat and cover to observe the water flow at the top of the block, this is when I noticed that it would pump ok for a short while and then just slow down and stop. I also checked with everything back together correctly by removing the line that supplies the automatic choke to use that fitting as a telltale. I saw the same thing, water for a while and then just exhaust in little puffs

The tstat holder (black thing), check valve, and ball are in place and look fine. However when I flush water into the drain tube (lower unit off) water comes out the supply tube with seemingly no resistance. That check valve should at least do something? I really dont know what the water path is inside this motor.

I have 2 short videos, one shows flow (and then lack thereof) at the top of the tstat housing without tstat and cover and the other shows the puffs of smoke exiting what is normally the supply line to the automatic choke. I do not know how to share them here.

I have gotten pretty good with the 1956-1958 motors, but this one is different enough that I may not have a good grasp of what it should be doing.

I want to convert this motor to a short shaft. The boat it is on has a very tall transom extension to take the long shaft. Given the condition of the lower unit I will just replace it rather than rebuild it with a shorter shift rod. Its really ugly and needs resealing(and gears/bearings inspected…water may have sat in there), I dont think I can extract the skeg screws intact anyway. I am looking for a donor motor or gearcase locally. I was hoping to get it running and tuned to make sure that the rest of the motor was worth putting money into before I make a purchase.

I was also concerned about an intake clog so I ran it without that plate/screen installed and there was no change.

Need2fish, I am not sure what you mean by outputs? I did my pump flow check with the thermostat out and cover off and water spews out at first and then just stops. Not knowing the water path well, it looks to me like that should be a direct shot from the pump, into the jacket around the cylinders, and then out the hole in the head. With the cover on it should either be directed down to the return side of the pump or out the exhaust.
I also checked at the output near the top of the block that normally feeds the automatic choke, same thing. water at first and then just exhaust puffs.

I have never removed the powerhead, but i suspect that it is a replacement. The block itself just has that flat red primer on it, no top coat present anywhere. All of the other parts are (were) white. If it is not the original powerhead it was replaced more than 30 years ago prior to my father acquiring the motor. I asked him about overheating issues today and he said that he never had any trouble that he could recall.
Would this blockage you mention be something that should be either present or not? As in an installation error or is it something that might develop over time.

The lack of water spitting was just what prompted me to look into it more deeply when I thought it was running hot. The lack of water flow at the thermostat housing and auto choke supply is what really has me concerned. The motor does have the over temp sensor on it which I think is just a switch that will close when it gets hot enough. I dont know what temp that will happen at and I dont trust it yet.

I will track down a thermometer, I know I have one somewhere. My primary concern there is that if the jacket is empty there is going to be less heat transferred to the outer surfaces which could give some false numbers. How hot do I dare let things get? I see the thermostat is 140ish F.

Am I wrong in my thought that without the thermostat installed and with the cover removed, the pump should just spew water out the top? Or that with them both installed, there should be a constant stream from the auto choke supply barb?