Just had rebuilt 496 installed in boat. Had a few upgrades done to it and it was ran on the dyno for ~45-50 min to work out any fuel and alarm issue. While engine was out of boat I had the impeller swapped just because it was easier at this point rather than in boat, old impeller looked fine. Dropped boat in water just to test, never left dock and started it with no issues. First thing I looked for was water coming from exhaust tips....did not appear to be any coming out. I waited for 15-20 min and temp went straight to 180 or so and alarm sounded...shut engine down. Waited 5-10 min and re-started, temp would start at 175 and start climbing again before I shut it down. Each time I never saw any water coming from exhaust tips. Once home I check sea strainer and water was in the bottom, also checked distribution tube on bottom of header with water in it. What else could I check and what else could it be? Last season I no issues with an impelller breaking loose. Engine was completely tore down in off season and ran on dyno with no issue either....

If the pump housing is worn the pump may not be flowing enough or at all...if no water is coming out of exhaust its probably a manifold temp alarm you're getting

Pump housing was replaced last year with new impeller. Just new impeller this year.

Mechanic that installed engine said he ran it in water for ~30 min with no issue, temp never got above 160.

you are probably get air on the inlet side, it does not take much to create a problem.Check sea strainer lid and flush hose cap seal if you have one, on some boats we had to add another seal to the flush cap.

No flush hose cap that I'm aware of......I did remove the sea strainer lid last night to check for water in it.....lid seemed tight...it is in an awkward location on transom and looking thru lid is impossible to see if any movement is happening.

It appears to be the impeller again. Mechanic said the plate on pump was scored an impeller was bad. How could this happen? It was just changed and less than 30 min on new impeller and no dry start. Plus the housing was just changed last season......darn brass pumps!!