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Water from #1 plug on1960 Merc 700E Super Marathon

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" I have a drip of water comin

" I have a drip of water coming from the plug area on this motor sn #1300430. I idles fine and runs off idle good, but misses at anything above that. Any sugestions? All photos that I've seen of this motor don't have a little "D" ring in the middle of the back of the lower leg. Is this because it is a super marathon or what? Also where do I and what kind of oil do I put in it? There is a 3/4" plug in the side with a rubber gromet on the lower leg and a small screw below that. Water came out of the larger one on the top. This all doesn't sound good. I know jack about boats and can't find anyone in my area that knows about this motor. Most are amazed that it is direct drive and direct reversing. It seams like alot of motor for this little boat. 1970 14' Larson speed boat. Is this package worth doing anything with? "
 
" Replace the the gasket . It

" Replace the the gasket . It does not have a cylinder head, only a water jacket cover. "
 
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