When I run this motor there is an excellent stream of water from the tell tale which is good but I also see water coming out at the bottom pivot is this normal?
The water is pumped out with the exhaust from the engine, into the motor leg.
Eventually it will exit through the prop with the exhaust.
When at low rpm's, ( idle ), the water tends to build up in the leg, but as rpm's go up, it gets pushed out.
It is water, the leg is not sealed, so it will exit anywhere it can.
Through small weep / drain holes, around the shift shaft, etc.