Sounds like the impeller is shot, and the lower-leg isn't installed quite right. The impeller should be changed every few years, or so many hours, and if the motor is turned over without any water muffs, or the boat in water, it will burn up the impeller in a hurry.
Its a small 'sprocket' looking thing, with rubber vanes/fins, that squeezes in to its houseing by bending its vane/fins so it creates a seal and pumps water up to the motor.
If the motor doesn't get any water, it will run for a bit, then die out, and won't start for a while till it cools. Putting the throttle up or full will cause the motor to over-heat. They will usually idle fine, and some people put on water muffs which will pump water up to the motor even though the impeller is shot, and sell the boat like that, without telling the buyer.
The good news is their only like $40. There are 5 nuts holding (my 63' merc 500) lower leg on. One is a hex bolt that you need to use an Alen key from the top of the tail end of the leg. You should see the hole, and it holds on the 'tail-fin', if your has one which also hides another nut. The other 3 are visable.
Before you let the leg drop off, get ready to grab 1 or 2 of these little round 'cam's, and mark their position. Drop the lower leg, and you'll see the impeller housing. Take it apart, and pry out the old impeller, and take it to your local marien shop to get a replacement, or two.
Slap it back together, and your good to go. If you re-install the lower leg properly, your reverse will work, and the prop wont turn in neutral. I spent a year with no reverse after I first changed my impeller, so trust me, its not hard to put the leg back together a bit off, and not have reverse afterwards.
Follow the instructions at the end of this thread for how to put the lower leg back together.
http://forums.iboats.com/showthread....38#post1737438
'77 Mercury 700 has no reverse
Linear Mode
