When my 67' Big Twin 40 is idling, exhaust smoke comes up in to the engine compartment under the cover. The engine runs fine other than that. How can that be redirected to the proper exit channel?
Remove the lower unit and make sure the #202591 o-ring is on top of the water pump housing. There are two more, and a spacer, above the extension housing if it is a long shaft. These will fill the hood with smoke, big time.
The problem could also be the fat seal between the exhaust housing and outer shell, especially if you are running it in a barrel.