As I have a '92 7.4L Bravo, I don't have a pressure sensor and I am not sure of exact location on the B.B.C. MPI, but as Woodieman said, the raw water pump (discharge pressure side) is a good place to start, and if it's a closed cooling system, possibly the heat exchanger inlet from the raw water pump. Not too many other places for it to go...... Do your manifold risers stay cool? If so, that would indicate decent water flow thru them and pressure sensor accuracy may be suspicious. When logic says "water pressure sensor is not working properly", usually means it didn't pass the system self-test when logic initiated the test and is defective and "locks in" the alarm, vs: low pressure problem.
PS: This post is in the OMC forum. You may get more / better responses if it were in the Mercruiser forum.