Just got my motor back in and it is running hotter than it use to - now running up to 180 deg F. It is a 1986 Mercruiser 260hp (350ci/5.7L). I replaced the impeller in the alpha drive earlier this season and just replaced the engine water circulating pump today. I have also put in a new 140deg thermostat. I have through hull exhaust and water spits out as it should. The engine is raw water cooled and I checked the temp gage at idle after a few minutes it starts to climb up to 180deg. Any thought what to check next??? I am stumped. Please help!

My thought is to let the engine break in before you do anything. 180 degrees is not a excessive. Odds are the temp will drop down as the rings and other parts break and you have less friction. Friction = heat.

Just got everything back together after doing a once over and draining the entire system again..... started from scratch - now it goes only to about 170Deg. - Seems like that issue is solved, however it is puffing clouds of steam out the exhaust.... I just replaced the manifolds and it is a fresh water boat w/ 600hrs . the motor was just rebuilt - why the white smoke/steam? Block/heads checked out OK during the engine re-build.... Any ideas???

It shouldn't climb to 170 at idle. Is this in the water or on a hose. Can you touch the exhaust elbows? They should be warm like bath water not too hot to touch. Did you check the hose that connects the outdrive to the transom? Did you replace the exhaust elbows when you got new manifolds? Did you check you timing?
Jim

running on the hose... getting good flow to the motor.... I can touch the exhaust elbows/risers. water pickup hose is good. getting good cool water to the in line oil cooler

You really can't troubleshoot overhearing on a hose. Water test you may not show same readings. You may not have a problem. Pay attention to temp at idle , off idle, just on plane, wot .If it gets hot will it come down at 2000 rpm in neutral? Test results will tell more.
Jim

Give it a little time to loosen up a bit. Mine run hot the first trip, like 180-195. They begin to cool after a few hours, or on the second trip.

Make SURE you don't have junk in the oil cooler. Back flush all areas of possible restriction. Make sure you have a bleed hole in your Tstat.

Couple things to check...

You mentioned you replaced the manifolds but did you also replace the "Risers"?

Also, behind the bell housing, where it connects to the transom assembly your intake hose connects.... Take the hose off and then take out the two bolts that hold the plastic fitting on. Right behind that fitting you usually get build up over time and it reduces flow.

Steam out the exhuast is usually in indication of bad risers or reduced water flow.

the t- stats on these motors do not use bleed holes by pass is done in the t-stat housing .