1969 Mercury 650E...issues

[SB49]

I have been on this forum many times and it is a great resource...this is my first time posting though. So I bought a boat last season (1965 Lone Star) and it came with trailer and a 1969 Mercury 650 outboard (SN 2604633). I just wanted something simple to take out fishing and tubing on our local lake and this boat is perfect. Anyway, it has been one unfortunate event after another. Where to start...the timing belt broke which I managed to fix with some help. Started up again just fine but sounded like it was filled with rocks and only had about 25% of the power. Timing?
Got it out of the water and now I am slowly working on it. I have the parts manual and the owners manual and I have two questions related to the attached photos: one, there is vent on the ignition driver housing that I believe should have a hose connected to it, right? If so, where does it go? Clearly I am new to this.
Two, looking at the wiring diagram for this model, I am concerned about the switch box assembly. I think there should be seven terminals, right? Is it appropriate to have wires from the distributor and the harness on the same terminal? Also, the white wire from the harness isn't connected to anything.
I could come up with several other questions but I will start with those.
Any help would be much appreciated.
Thanks.

 

[Jgranado3]

Incorrect, I have the same exact motor as you do and there are only 4 terminals. Red, white, blue and green. The 7 terminal connection is for a different year.

 

[racerone]

All these distributor motors from early 1950's to late 1970's use the same belt.----How did you make sure belt , distributor and crankshaft were correctly timed ?