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1983 Suzuki 140HP hole in exhaust tube

I have just overhauled the motor after it overheated. The impeller was melted in the housing. There was no alarm because the kids shoved it under the seat when it came loose from the dash.Wet waterskiing bums and rust killed it.I saw what looked like a hole on the impeller side of the exhaust tube but thouht it would be ok.Now while running it in it gives a heat alarm at about 4800 rpm or 50 kmph.Well below waterskiing speed.Could this hole have caused the overheat in the first place or was it just a plastic bag as I suspected.Everything waterpump related has been replaced with new parts.At idling on the water,telltale is warm and strong and motor is warm to the touch but not hot.It will run all day under 4800rpm with no problem.Thanks for the reply eli lilly.
 
Anybody had a similar problem perhaps? Any advice would be very much appreciated.It seems that the impeller does not get water at a certain speed.Motor setting on transom has never been changed.It does have those fins on that helps it to plane quicker.Could this cause a cavitation effect at speed? As you can see I'm grabbing at straws here.

Pieter
 
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