1990 Johnson 40hp Behavior

[Modemagic]

I've been working on getting my 1990 Johnson going and after fighting with it it runs, although not all that great. I noticed it spraying water it the back of the motor and the water (it's in a tank) is really oily.

Please watch this short video linked below:
https://youtu.be/K-LYfWB0FRw

A few seconds in the water coming out the back (not the pee pipe) is that normal?

 

[hardwater fisherman]

Look at a parts breakdown from shopevinrude.com and you will see that where the water is coming from is an exhaust relief. Therefore I would assume it is normal. Also when running in a barrel you will get oily water.

 

[racerone]

What does a compression test show on this motor ?