not a lot to go on there. What size is it? My 25 has a hose that leaves the block above the plugs and exits out the bottom of the starboard side of the cowling.
The two rectangular holes are exhaust ports. If you are standing at the back of the motor looking at those exhaust ports, it should be to the right and a little higher up.
If i have those flush earmuffs on with presssure from the hose should I not see some water come out some where?
I do see exhaust come out from the prop cowling.
watch this video. at the 0:17 mark you will see where the tell tale (pee stream) comes from. DO NOT run the motor for any amount of time if you do not see water coming out of this tell tale. I realize the motor in the video is a 80hp, but your motor will not be any different.
Of course they have a fantastic reputation. However, I usually buy from my mercury dealer in town. If you are not getting any water out of the tell tale, you need to replace your impeller.
To add to what matth121 said, water should come out the tell tale as soon as the motor picks up. It starts running and you dont see any water, shut it off as fast as you can.