Re: 1981 9.8 Mercury cooling system
I don't see how an impeller that's been sitting curled up in the pump housing for 14 years could possibly be good! The stubby vanes will have taken a "set" and would not pump properly. Strongly recommend you drop the lower unit again and install a new impeller.
Before you remove the powerhead, you can do as suggested and run water up the copper water supply tube after pulling the lower unit. Or give it a blast of compressed air, if you have a compressor.
If you get no air or water flow to the powerhead, it's very likely the upper water tube grommet and/or the plastic washer is bad, and the powerhead will need to come off for access to the grommet.
In that case, be sure to scrape out any buildup of salt/deposits where the grommet sits. Spread a thin coating of Permatex No. 3 Aviation-Type gasket dressing on the rubber grommet before installation. This will help prevent deposits in the future.
BTW sometimes the telltale is just plugged and needs a good blast of air to clear out.
I've seen overheating problems caused by massive buildup of silt deposits in the block. If you find there are circulation problems in the powerhead, you might also want to remove the cylinder block water jacket cover (the cover at the end of the block with the spark plug holes in it) and check for blockages. Note that the water jacket cover bolts can break very easily if they're seized into the block; a careful application of heat from a propane torch will usually release them.
Some small Mercs do have a thermostat, if yours has one it'll be under a small cover held in place by a spring-steel clip, at the top of the exhaust manifold cover. It'll be very obvious if it's there, and you could open the small cover, remove thermostat and run the motor to see if water comes pouring out.
One last thought, in the absence of a decent tell-tale flow, a good indication of how the cooling system's working is to feel the exhaust manifold cover. It'll get too hot to touch real fast, if there's not enough water flowing thru the powerhead.
Normally the exhaust manifold cover should be cool to the touch or just lukewarm.
HTH & let us know what you find...........ed