If the wire is loose or falls off the sender it will peg the gauge. Don't think your motor would still be running if it really ran at 240 all summer

I took each plug out individually and started the motor for 30 seconds. A small amount of sand came out with the plugs, but other than that the water was running clear and the pressure was strong. I ran with MGH's tantrum up the middle channel to Deckers averaging 50 mph at 3500-4000 rpms, no problems with the engine. The water pressure gauge was reading a bit over 10.

The water temp gauge was constant at about 200. Thats what it read in July as well when I did a 160 mile round trip to Grand Bend ON.

i threw up a video of ur boat - looks good running

If its really 200 that is too hot.

You have to get a laser temperature gun on the thermostat housing when the motor is at 200 degrees to see if the guage is right or wrong. That will really help tell whether it is a cooling issue or a wiring issue and where to start diagnosing the problem. At 240 degrees you should see a noticable drop in oil pressure from the oil thinning out. That would be at least an indication that the engine is actually overheating as opposed to needing a new sending unit, etc.

Just because it is running lower now doesn't mean it is not a problem. I do not know where you live but cooler water temps can cause such a reduction.

I'm having the marina check it. I just hope it is the therm and not the actual temp, can't afford to replace that engine right now if something's facked up.