Is the powerhead getting hot when running? Too hot to touch?
Are the intakes in the lower unit clogged?
With the lower unit assembled but not yet connected to the leg, you can test pump operation using a container of water deep enough to cover pump. You can use a drill, but turning by hand (clockwise) can work. If the water bubbles up out of the tube grommet, assume the pump works.
Operation of the tell tale is not critical, but can indicate that water is not getting up to the powerhead. If the motor is not overheating (too hot to touch, over 160F if measured), water is getting up to the powerhead and through it.
Did you test for engine temp, and use a prod about 6 inches or so into the tell tale? I don't find compressed air the most efficient test for the cooling system. (BTW, with the l.u. removed, you can also push water up and through the powerhead through the water tube. Use a hose and step down the diameter to test.) Water should gush out below the p.head.