Looks too be a low hours motor.----Install new fuel pump diaphragm as well.----Yes , that item is available.----Perhaps not listed in 78.----But listed on many newer models.
Find a good boat shop.-----They will order a kit for you.-----Or fabricate an adapter using an old tilt tube from a Johnson / Mercury / Evinrude / Yamaha.----I can not see your workshop , or know your level of ambition.
These things should be banned from " near shore " areas.----As stated they damage docks , boats , nests of water birds that are just above water level.
Verify the shift rod height.--Post the value you see as removed.------Remove shifter cable ( boat in the water) and see if you get reverse.----Cables do wear out internally.
The red lever is for manually opening the primer valve.----Used when you have a dead battery and need to start this motor with a rope.-----The trouble shooting on any " trouble " motor starts with a compression test.----Post the actual values here.
Folks struggle with that simple latch.----They end up breaking it.-----I would use hose clamp / tie wraps to hold cables in place .----Then look for the proper part at my leisure.
Remove the sensor coil and inspect it.---Post the ohm value.----Remove the charge coil and inspect it.----Post the ohm value.-----No need to replace the CDI based on wild guesses.
A compression test is step #1 on any motor.----Next is a spark check.-----Motor could be running on 2 of 3 cylinders.----And yes , it will rev up on 2 of 3 cylinders on a hose.----Perhaps motor was sold for a reason.
