As for the carb adjustment, I read up on it in my manual, and it says you have the Type II Carb for the 72 40hp. Type I would be on the 71 40hp.
The adjustments should be:
Low speed mixture needle, turn out 1 1/2 turns from lightly seated, then tighten the packing nut so there is drag on the needle, but can still be moved.
IF you have high speed mixture needle, it starts off at 3/4 turn out from lightly seated.
If you have a fixed jet for high speed, it just gets screwed in with no adjustments possible.
(Make the following adjustments 1/8 - 1/4 turn at a time, allowing some time in between for engine to acclimate to the change)
Then, (preferable on lake) start and warm up engine to operating temp.
Adjust low speed needle clockwise till starts to stumble or stall, then back out Counter-clockwise till highest RPM's are reached.
Make sure you do a link N sync on the carbs first, since you've had them off for cleaning.. Very important.
Only for High Speed Adjustable: (Skip this if fixed jet)
If high speed is adjustable, then ON THE LAKE ONLY, shift into forward, and advance to wide open throttle.
Adjust high speed clockwise till RPM's start to drop, then back out counter-clockwise till highest RPM's are reached.
Then repeat low speed adjustment.
Then go back to WOT in fwd on lake to double check high speed.
As for the water pumping, How do you know it isn't pumping water? Does it have a tell-tale?
My 72 50 hp has exhaust overflow slots in the back, and I get a light mist out there when on muffs. There are some drain holes in the foot that stream water when running, but again.. Yours is a 40hp, so not sure how yours is supposed to be..
Might try dropping the lower unit and use a hose to put low water pressure directly up the water tube to make sure nothing is clogged up..
And once again, I'm still quite new to outboards, but from what I've experienced so far, read here, and learned I think this is accurate. (Real close anyway.. lol)
There are many great folks here with much more experience than I have and welcome them to confirm or correct me if needed!
Hope it helps even if just a little..