This is a problem I had recently and now resolved. Posting this in case it helps someone. The outboard is on my tender/workboat and it let me down a few months ago as I was preparing to tow a vessel. The engine overheated and partially seized. I pulled down the lower leg and changed the impeller but it still overheated. Plenty of water out the telltale but there was also some steam. This is always an indicator of a blown head gasket so I pulled the head, resurfaced the head surface and installed a new head gasket. It was obvious how the combustion gases were entering the cooling passageway and stopping the water cooling the top of the engine. The motor ran fine for ages but then last week I had the dreaded steam again. Pulled the head to install another head gasket, they are only $22 if you're curious. This time my mate was looking over my shoulder and he checked the top of the block for straightness. It was dead flat except for where the middle RH headbolt threads in. Just the inside corner was up about .5 of a mm! A few seconds with a flapper wheel on a mini grinder had that sorted. Unfortunately, the head was bent a little and took 40 minutes of resurfacing to get it flat. The head was done on a sheet of 240 wet and dry on a sheet of glass with plenty of WD40.
This is a '91 two stroke that now runs great again.
I could read posts like this for days.
great work ! thanks for showing how and why
nice to see the old outboards being allowed to continue providing service