I had a newer 4 hp but the leg configuration was the same. The rubber cover is where you disconnect the shift linkage....Never really looked at mine but I wouldn't be surprised at all to see water coming out from the spot you pointed out.
Did you check head temperature?
This is a 6 year old post, pretty sure you won't get any info.
Start a new post, post model number and ask what you are looking for or what your problem is.
I would pull the foot and inspect/double check pump.
After installing you can put a cordless drill on the driveshaft and test in a barrel of some kind.
I would want to know before I went to the river.
Because it's being forced up there. Pump is not self priming so must be higher than the pump at least when running in a tank. Clip some muffs on it or raise your water level.
You say you flushed it out through the water pump discharge. Do you mean the pickup tube?
If you did flush through the pickup tube and water came out and it won't with the pump than you must have done something wrong. Keeper seems the most likely.
In my experience when the motor is tilted gas mixed oil goes into the air box but the OP said it never did before.
Another words you don't need to explain it to me.
I'm assuming it's part number 25, 38 and 2 making the connection. Not sure what that does.
I do know that when tilted the floats will allow fuel to pass and flow out the carbs.
Let's see what the masters say.