No, I haven't inspected the thermostat but will. I anticipate that this grommet will be the culprit though. The previous owner ran this engine at the mouth of the Columbia River in Oregon, USA. When I changed the impellor, everything looked flushed that could be but there were some salt crystals in the exhaust passages. If saltwater eats away grommets even with religious flushing, it would be prudent to change anyway.
Even if it isn't the problem, I think it will be a nice courtship and looks to be easier than the four-carb adjustment. I know there were a few bikes out there with four carb setups, but on an outboard with a vertical setup it looks like a major PITA. I suppose there are those out there that would prefer this to the newer EFI models.
I do have a factory manual and it makes the job look like a few minutes off and a few back on. I think I will have to take my time as you did and try to look for any additional problems.
I can't believe the pricing either. If you bought this engine from parts it would cost $50,000!