You likely do need a new impeller they go bad just from sitting. I believe the water comes out the exhaust port at least it does on the 7.5hp I have. best to run in a bucket of water with lower end submerged. not a lot of water comes out normally in my case just check to see if your engine head is running hot. If you open the lower end gear lube screw and the lube is not white with water contamination your gasket is likely ok. but doesn't hurt to change gear lube anyway especially if it black from use. If your model does have a side weep hole you will see a port on the side of lower engine cowling. if you find one run a small wire up it or shoot it with air as it could be plugged with insects or debris or just in need of a impeller.