Re: 1987 mercury xr2 150
Take a coat hanger and clean out the bug nest in the little hole in the back of the motor so it can pee.
Shade tree tests: If water is coming out of the prop, it's pumping. If you can hold your fingers on the head for a few seconds, it's cooling. If you get burned, it's hot. If you can leave your fingers there, it probably needs thermostats, or there's a stick stuck in the poppit.
BTW, the only water that gets to the telltale is water that goes through the thermostat. If the supplied water is pretty cold, and the engine's not pulling, it might be little, sporadic, or even none at all and be perfectly normal.
About the only thing the telltale is good for is after you start up, and the pressure gauge starts registering, (if you don't have a pressure gauge, get one.) you look back to see the telltale before you blast off to make sure the engine is warm enough to not cold seize.
hope it helps
John