Mercruiser 3.0 MPI Alpha one - Is this the engine block? Is that rust bad?

[courtz]

Sorry I'm a total novice but i want to learn. I don't want to be stung when I take the boat for a service.
Im seeing rust on what i think is the engine block. Is that the engine block? (the red arrow and green arrow are pointed at it) - it seems to be where the oil goes in?

If that is the engine block - it seems like surface rust. How bad is that?

And last question - to the right of the green arrow - is that the manifold?

 

[bondo]

Ayuh,.... That is rust, but no, not to bad,..... yes, the exhaust manifold is in the portside of the motor,.....