I found a little clarity in this youtube video although there is some argument about which switch is called what , it is very informative and clarifies a lot of information.
just thought someone else might benifit from it as well---
https://youtu.be/whGSfsGHEao
I'm Luigi1955 in the comments. He was wrong. The one with the lever is the interrupt the one without is the overstroke switch.
BTW, if you do not have any drop in idle when you actuate the interrupt switch lever that is your problem. It will shift out of gear on the water hose without that working because there is no load from the water on the prop. In the water you MUST have the ESA working for it to shift from in-gear to neutral.
If you have the Pertonix instead of the OE points distributor (Prestolite) that could be your problem, there was a diode fix that Pertronix had on their site that was necessary to wire in, for the ESA to work with the Petronix conversion. Your OE ESA module is programmed to work with points, only. Now it may be possible to get an aftermarket ESA module that will work with the Pertronix, you can try calling tech support at CDI electronics in Alabama, they make OMC ESAs and might be able to advice you. The other possibility is that your ESA module died, I had this happen when the boat was about 26 years old or so. I could not get the OE one any longer (NLA) and got one from CDI that worked perfect and still does (changed it like 4 years ago). So you have to do some snooping around, is their any non-OE wiring hooked up to your ESA?
I kept my points distributor partially for this reason, partly because I grew up with cars with points and understand them and can fix them easily. I don't like aftermarket electronic ignition because if you can't find the mystery module that runs it you are SOL. I can pop in a set of points in about a half hr max.
Sooo….do a search on the Petronix OMC diode fix....see if that's what you have in the wiring,....if not....then try to put it together....and see if that makes your ESA work....if it does....great....if not....call CDI and see what they suggest, I can tell you that the OE ESA modules are NLA...…
One other option....is to wire the interrupt circuit like a Merc Alpha....less sophisticated than the OMC system because it nearly stalls the engine when shifting, but if the shift cable is working smoothly and the engine is in good tune, it works OK. The OMC system was better in that, it would not stall the engine.....just lowers it enough to get it to shift. There are also instructions out there to wire the OMC like a Merc, but I'd try to keep the OMC system working as designed, because it was better for sure.