"The overheat warning horn sho
"The overheat warning horn should sound when you turn the key on. If it does, fine. If it does not, have the key ON but engine not running. Find the heat sensor TAN wires that protrude out of both cylinder heads. Ground one or both of those TAN wires to the block, at which time the horn should sound immediately. If it does not, find out why as that's the only warning you'll receive if the engine starts to overheat, run low on oil, or have the VRO pump fail.
I'm having a hard time undrstanding exactly what the engine is doing except that you have a power problem when the throttle is increased.
Check the timer base under the flywheel to make sure that it moves smoothly from its idle position to its full throttle full spark position as you increase the throttle. Do this with the engine NOT running. If it sticks at any point, correct that problem.
You may have a restricted/sticking Anti Siphon Valve. See the following:
(Fuel Anti Siphon Valve)
(J. Reeves)
Many of the later OMC V/6 engines incorporate a fuel restriction warning via a vaccum device attached to the powerhead. If the engine overheats, or if you have a fuel restriction, the warning is the same.... a steady constant beep.
NOTE... Only the V/6 & V/8 engines have the above "Fuel Restriction Warning". The warning horn will not sound on the other models.
The fact that a engine is not overheating, but the warning horn sounds off with a constant steady beep, and that the rpms drop drastically would indicate that the engine is starving for fuel due to a fuel restriction. Check the built in fuel tank where the rubber fuel line attaches to the tank fitting. That fitting is in all probability a "Anti Siphon" valve which is notorious for sticking in a semi closed position. It will be aluminum, about 2" long, and the insides of it will consist of a spring, a ball, and a ball seat. If this valve exists, remove it, knock out those inner components which will convert it to a straight through fitting, then re-install it. Hopefully that cures the problem.
The above procedure will cure a restriction problem with the anti siphon valve as stated. BUT, it may also allow fuel to drain backwards to the fuel tank when the engine is not running (siphoning backwards) due to the fact that the carburetors/fuel pump etc are higher than the fuel tank. This condition is not an absolute as the valves in the fuel primer bulb usually prevent this backwards siphoning problem. However.... if this does take place, the cure would be to install a new anti siphon valve.
Also, if you're using any other spark plugs except the following, change them.
Use Champion QL77JC4 plugs, gapped at .040 ."