Stern drive power package..... An automotive engine with 'marinized' electrical and fuel system, coupled to a set of gears to transfer drive to a propeller.
Basically the engine, apart from the exhaust system and some minor changes to the cooling system, is exactly what you see in your car.
Yes, quite normal to feel some air in that area. It's a flywheel housing with a dirty great lump of cast iron spinning around.
Chris.....