Steam rising from valve cover vent on 4.3L Merc
 

I took the boat back today and had the timing set properly. It still has a knock in it at higher rpms. The spark plugs are all still normal, compression is still 120 psi in each cylinder and there is still no water in the oil. It has steam coming out of the valve cover vent on starboard side only. Does anyone know what could cause that?

When the steam comes out is it in a "puffing" manner or a steady stream of steam?

If it's puffing you have engine problems such as a blown head gasket or a holed piston... If it's just steam you can be having some blow-by.

It's really hard to know exactly what's going on unless hearing it for myself.