If there's paint peeling off right in middle of both mating surfaces, where cylinder gaskets lives, that's an indication that gasket is not sealing as it should, it's already compressed, hardened, dried, kaput. Running an OB with gasket issues in fresh or salt water gives same symptoms.
If you plan staying with that simple OB and having fun with it, remove powerhead, remove thermo, clean all water paths, clean/sand both powerhead's mating surfaces to smooth cond. Take advantage to decarbon internal head and piston head as well. Torque head gasket to 28 NM with a trorque wrench or take powerhead to a mechanic shop that can retorque it for you.
Will need the following spare parts : head, lower, thermo gaskets, plug set & thermo. That nice 18 is worth a complete powerhead restoration..
Happy Boating