Ok....you have a D4 model, which is 2004
If you have spark and you have good compression and timing is where it should be, the only thing left is fuel.
I doubt that bypassing the water separator will fix it. If you squeeze the fuel bulb, that should fill all the carburetors with fuel.
I would go back to the carburetor.
Pull jet set #21 out and make sure that you can see through it. The hole is pin size. If clogged, that cylinder will not function at idle or acceleration.
http://www.boats.net/parts/search/Honda/Outboard Engine/2004/BF40A4 LRTA/CARBURETOR/parts.html
The pictures of #7 bowl is deceiving. There are passages in the bottom of the bowl that feed fuel to several places. Sometimes they are very hard to clean out.
While you are looking at the bowl, this vintage 25, has had some starting issues in the past. There should be a number engraved in the bowl just above the drain nipple. It should either say 75 or 70. If it says 70, it has the updated bowl. The bystarter #18 number will start with DE or DR if the number on the bowl is 75....and will start with HH if the bowl says 70.
I am just saying that, in case you have to change the bowl, you want to order to updated bowl and bystarter, if they are not already there. This change was for start up problems, not running problems.
Back to the carburetor....
Once the carb is apart, notice there are several pin sized holes at the top of the back of the venturi. When the butterfly is closed only one can be seen from the back of the carburetor, when it is open you can see them all.
Those holes provide the fuel to the motor at idle and during acceleration/transition.
You need to be sure that fuel is flowing good through those.
Using WD40 or Brakleen with the straw, stick the straw up through the bottom into the hole that the jet set (skinny tube) goes at the top of the venturi. Spray the Brakleen into that hole and make sure that it has a good spray out of all of those holes. (make sure you idle mixture screw is in place at that time). If you do not get a good spray, you may have to backprobe the holes, etc to clear them out. If they do not spray good, the cylinder will not fire at idle.
Other places to check, are the black hoses on the back of the carburetors. They are carb bowl vent hoses and may get plugged up by muddobbers or other critter debris.
Mike