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1978 Johnson 70hp

Compression test first.-----Could be a blown head gasket.----Cylinder head is warped and will require resurfacing.---Pull cylinder head / gasket first if results indicate that.-------Could be rust damage on the cast iron sleeve from water in there all these years.------Or other know issue is exhaust manifold gaskets leaking and warped plates there.
 
3 CYLINDER EXHAUST PLATE..jpgA common problem. Exhaust cover plate on side of powerhead warps, then gasket leaks and squirts water in through exhaust ports. If it has been sitting for a "long time" with water in cylinders (and bearings), it might be junk.
 
Usually due to head not being torqued properly nor in proper sequence resulting in head gasket being faulted between the cylinders. Maybe not your problem but one of the causes.
 
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