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Step #1 is a compression test.----Then remove flywheel to clean and set the breaker points.---Replace water pump impeller BEFORE putting motor on a boat.
That is what i said ---no high speed mixture adjustment----Perhaps pull the simple VRO apart for inspection.----Likely the fuel pump donut seal needs replacement.----Air motor is likely OK.
No high speed mixture adjustment.----Are both carburetors closed at idle, yes or no ?-----possibly bump up idle speed.-------Checked flywheel key?---Possible issue with lower crankshaft seal ?
They are really core plugs.-----The design intent is NOT for freeze protection.----Consider yourself lucky if there is no other damage.-----When did you winterize ?----A month before cold weather ?----Halfway through a cold day ?
By all the sanding marks it looks like work / inspection was done at one time.-----Work was halted , project abandoned.----Perhaps in your are there are not many other DRAGONS.-----Bragging rights when restored and sailing will be PRICELESS.-----They say that steel " home built " larger boats...
It will take more time than you think.-----It will cost more beer / wine / whiskey tokens that you can think of.-----Restoration work is expensive.----
As pitch goes up then often the prop diameter is reduced.------The slower the boat ( think tugs ) then prop diameter is BIG so to speak.-----Water and air behave differently as speed goes up.----I would buy that prop if price is right and has correct hub diameter.
The thread in the drain hole is 3/8-NC----Make a T with that thread on one end .----Gauge ( 0-15 PSI )-in other end and a shreader valve.----Bicycle pump to pressure it up.
If you were doing 2 motors a day then maybe the tool would pay for itself at $100 / hr.----Old tyme work methods are good enough for me.----Never had a rod damaged!!
There is nothing wrong with lower unit or linkages on this 1977 model 85 HP.----The transom bracket was switched out to put modern power trim tilt on it !!!!