When I had my water in the oil problem, I figured out a way to run the engine on the water hose briefly to check for combustion gas getting into the cooling water. At first I didn't see anything but after running it enough to warm up sure enough I saw bubbles, a sure sign of a blown head gasket or cracked head.
You can do this by replacing the exhaust manifold feed hoses with clear hose and running the boat in the water, after the engine warms and the stat opens, if you see bubbles in the water stream, it definitely could be that.
I do think you will wind up pulling the heads. BTW it was harder to get my original intake off than it was to get the heads off! Not the bolts per se but the old OEM gaskets were baked on that intake like Kryptonite. It took 2 days of tapping, prying (carefully) cussing, etc to get it to break free. The heads, once I got the 13 bolts out per side, came right off!
You will have to inspect the block deck carefully for any burn through if it was a blown HG, and the heads have to go to an automotive machine shop to get checked for cracks. I wound up replacing mine. Just let the owner know how much labor time this is, because on an older marine engine there's no telling how long it will take to get things apart. Here in the salt pond mechanics just won't do it. Too many pitfalls and took risky if you are trying to make money. I did it and it worked out fine for me though.
after 2 days of prying:
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used up a battery or 2 on my 1/2 drive De Walt getting all 13 head bolts out per side:
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and as it turns out wound up buying a pair of these from my local speed shop (S-K Speed in Lindenhurst, Long Island NY).
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