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OK basically you need a new exhaust system, your starboard manifold is all clogged up with rust, that's what happens to them after about 5-6 years in salt water. You are also missing the exhaust flapper on the starboard side, it is probably vaporized in the bottom of the Y pipe (metal pipe behind the engine that each side connects to behind the engine). Your port side is not as bad, the manifold exit ports are not completely clogged and the exhaust flapper is still there. Its a rubber flap at the top of the Y pipe. The thing you are pointing to asking what it is, that's the power steering cooler. The pic of the engine looks good, I don't see rust in the exhaust ports.
Now, this is not going to be cheap. You need a conversion 2 piece exhaust system to replace the now discontinued OMC one piece units. Do a search, there are a few versions out there. I prefer using OSCO parts vs GLM. Figure about 700 in parts. And I'd also replace the thermo housing, it looks like the cooling ports have necked down. Here is a pic of what those ex manifolds look like when cleaned out after 5-6 years in salt. From my last replacement. Next one I am going to the 2 piece system....