Re: leak in lower y exhaust pipe
Now we get the rest of the story.
With the overheat, it very well could be the start of all your problems. The exhaust elbow gaskets could now be leaking, or maybe the manifolds got hot enough to crack, which could let water get into the engine when you shut it off. That same overheat may be what caused the hole in the Y pipe.
Pull the exhaust elbow off and look for rust and water in the exhaust passages. If there is water there, pull the outdrive, put the elbows and exhaust back together, and start the engine (NO Water) and run it for 10 or 15 seconds to blow all the water out, let it cool completely and do it again. Probably sounds better now. Let it cool again, then start the engine and fog it with some oil in a squirt bottle.
Now, the engine is safe for the rest of the work you have to do.