Re: 1961 sea horse 40 hp.
Hey, this is my motor! I love this motor, it goes through hell and keeps on ticking. I have done all sorts of things to it, and it still keeps going, better than an Energizer Bunny!
If you are not in too much of a hurry to use it, I would take the magneto plate right off and clean it up and replace everything. On first guess, I would just guess that either a condenser went (cause for all the black residue), but since it is still running well, then I imagine that the points are shot.
As far as timing, it is set by the gap on the points. So check that! "All engines equipped with breaker point ignitions use a point setting of 0.022 in. (new) or 0.020 in. (used).
Failing that, I would do a complete link and synch! First things first, check the point gaps on the points...