Seems the housing that goes over the water pump is messed up. Its bent and letting most of the water go out the sides of the pump. The seals are also shot in it. So I am shaving the bottom off with the lathe and getting some new seals. It has a hole in the side of the water pump. Looks drilled to me. Not sure if its suppose to be there or not. Seems like a odd place for a seal unless its some type of pressure relief hole.

I took the LU off the motor and hooked a electric pump up to the motor and fired it up. Pumping 60 degree water thru it and running the motor. It never got over 100 degrees on the casing of the motor. Just gotta get the pump to pump enough water.