You have picked a great engine to work with for sure. I doubt the oxidation on the outside has affected the internal parts, but anything is possible. Is this a salt or fresh water engine? Salt water engines are much more of a challenge to work with/on, fasteners are usually corroded/stuck, and the aluminum gets compromised from oxidation/corrosion.
I would avoid the urge to cosmetically restore this engine until you have gone through it mechanically to make sure it will run well. Start with the simple things, drain the gear lube (do not remove that phillips head screw down on the skeg or the shift linkage with fall out of place), remove the upper and lower slotted fill/drain screws. The old lube may appear dark/black, that is OK, but there should be no signs of water. “Milky” colored gear lube or raw water spells trouble meaning the gearcase will need to be pressure tested to isolate the cause of the leak prior to tearing it down for inspection and reseal. In any event, the gearcase should come off to do a water pump servicing regardless of gear lube condition.
Check the compression. Believe it or not, these engines don’t have a very high compression ratio, you will only see about 80-90PSI, readings should be even on both cylinders though. You will need to rework the ignition and fuel systems in order for this to be a reliable daily runner. You can do a quick inspection of the ignition by removing the inspection cover off the top of the flywheel and peeking inside. If the coils are cracked, they will need to be replaced. But, in the big picture, this may be a good thing, indicating the engine doesn’t have that many hours on it.
These engines are relatively easy to work on, but just like most things, “it is all in the details”. So, I would start by finding the correct parts break down and a decent manual. I just happen to have a parts break down for the 1955 Johnson 10hp QD16, and can email it to you. But, first check the transom bracket ID plate to ensure your engine is a 1955 model QD-16.
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