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Originally Posted by phatdaddy
I had a similar problem on a 83 150 Merc. It turned out to be a broken ring in the middle port cylinder which is just below the temp sensor. I pulled the power head to check the gasket between the base. changed head gaskets and had the heads shaved, etc. While the heads were off ,I was looking up in the cylinders and noticed the ring gap on that piston was about 1/4 inch.
Good Luck.
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pd, did you have good compression?