Any ideas
 

In April purchased a 2000 Mariah 272 7.4 mpi bravo III with 450 hour. Before I purchased it I hooked it up to water and started the motor and ran if for 10-15 minutes along with putting the drive in gear to make sure the out drive was in good working order. All was good no overheating etc. Purchased the boat and took it to the lake the next weekend. It ran great except it smelled a little funny. I stopped the boat and lifted the engine hatch. Smelled like oil or gasket burning. Looked out the back of the boat and steam was coming from starboard side exhaust pipe. I felt the manifold on that side and it was untouchable. Took the boat home and pulled the impeller and it was brand new as the existing owner has stated. Remove all the hoses to look for impeller parts and found them in the oil cooler. Thought is was fixed. Returned to lake next day only to have same thing happen. Read on line maybe the exhaust plugged. I removed the manifold, rise and elbow, acid bathed, ran wire thru it and power sprayer. Looks like brand new. Put together in drive way( off boat) and hooked up to water. Water came out ever water chamber. Put back on motor and with same result. A friend of mine told me to add 3ft piece of water hose to the each water supply hoses from T stat to exhaust manifolds. I did that and the steaming moved from starboard to the port side. Which would mean a blockage in the t stat house. Purchased new t state house same result. To date. All brand hoses ( including transom hose), new water pump, new impeller/housing, New t stat and housing. All exhaust system have been removed and inspected and reinstall twice. One more thing the engine never overheats. Use IR gun on the block and head at ever lake test and they run 165-170. T stat is 160 . Out of ideas. Help

Re: Any ideas
 

I assume this is a raw water cooled 7.4 MPI and not fresh water cooled?
It still sounds like some sort of obstruction in the cooling system. The fact that it does not get hot on the hose but does in the water gives us a little clue. The engine requires very little cooling water to maintain temperature, most of the water bypasses the engine and goes into the exhaust. Have you inspected the hose from the outdrive bell housing to the gimbal housing? I have seen where these hoses can take a set or get a kink in them. When you are running on a positive pressure hose they will allow enough water to cool properly however while when running off the motor driven water pump they can collapse/kink due to the negative pressure of the pump (sucking). Did you try pulling the hoses one at a time from the thermostat housing to the exhaust manifolds and see water flowing?
Lastly, did you happen to take temperature readings of the exhaust manifolds and elbows with the IR gun? If so, what were their temperatures?