My 1988 7.4 Mercruiser seemed fine the first day out this summer, but the second day began stalling and bogging down. I looked at the engine and found oil / water mix was around the crankcase breathers. Pulled the dipstick and water definitely in the oil. My problem is that I've disassembled the top of the engine and still can't find a problem. Head gaskets show no obvious indication of a breach. No visible cracks in heads or in the lifter valley. Along the way, while the heads were still on but the intake was off, I blocked off the water ports in the heads and connected the garden hose to the seawater intake and the block began filling with water rapidly. I am near certain now that the block must be damaged but I thought if this were the case I'd be able to see something from above with the intake and heads off. What are the possibilities? From my garden hose test I think I can rule out the head gaskets as it filled very quickly. I have also verified that the oil / power steering cooler is not the culprit with a pressure test. I winterize every year myeself, step by step by the book. One other symptom was that there seemed on day two that there may have been some partial hydraulic lock in as the starter struggled to turn the engine over during some starts.
