Thanks Fleetwin, the exhaust housing was burnt on that side when I got the motor. The other side of the housing remains warm, not boiling hot. Strange how the hot exhaust goes down and makes a right hand turn? Maybe I will just pick up a new exhaust housing, as they are relatively inexpensive?
The motor has 90psi on each cylinder, in addition to the new power head base gasket, it has a new cylinder head, and gasket (bad top plug thread), new impeller, all new seals in lower unit and water pump, new points, coils, and a carb rebuild. Starts and idles well but after running a few minutes it starts to cook.
If anyone has a 58 or later QD exhaust housing I would love to see a picture as maybe it does have a casting defect, or possibly a section of casting broke off? Who knows what could have happen in its 59 year life span.