I haven't bothered to take the housing off yet but here is what I saw tonight while running on the hose. All future references will be made looking at the motor from the back seat. The water from the sea pump goes through the oil and PS coolers than then to the front right port on the housing. It remained cold as ice. The port directly accross(front left) goes to the water pump on the block. It is much larger and was hot hot hot. The rear two ports go to the exhaust and they were warm. What gives??? Is there some sort of separation inside this thing. If the water coming from the sea pump is cold, wouldn't the water going into the water pump be cold? They are directly across from each other. Is something wrong? Please help, I'm going insane.

Can't help with mental problems, but the thermostat housing is pretty simple. You missed a couple other components, like the thermostat and outlets from the water pump. A diagram explains water flow easiest, with open or closed thermostat. There's one in the Merc manual but I'm not sure about online.
So before I get to an explanation, do you have a problem with it or are you just curious?
Gary

I guess I do not know if I have any problems or not. I do have a Merc. diagram to reference. More than anything I was very surprised to see one side very cold and directly across be very hot. Even with the T-stat open the cold water mixing with the hot should cool it a bit. My other surprise is that the hoses to the exhaust were only luke warm. I would think being close to the t-stat that most of the hot water would exit there? My engine is running around 160-170 degrees WOT with no apparent problems other than the fact that the stock oil cooler cannot keep up. I have a larger cooler coming.

If it aint broke, dont fix it. Actually, it sounds OK. Try the same thing on the water rather than a hose. The hose does not supply nearly as much water as the sea pump takes in, even at idle.
Whats the problem with your oil temp? Did you change the engine, heads, add a supercharger, etc?
Gary

what your descibing is the normal operation of the thermostat houseing. if you were to take it appart you will see that the cold water has a small bypass opening inside the houseing for the hot and cold water to mix. and thus thats where you get the luke warm water to the exhaust from.....the lower hose that goes to you recirc pump will only be circulating the block water and thats why that one is hot because its the engine water you feel. Hope that clears up a little for ya.......the easiest way to understand it is to take it appart....by why bother if its all working properly! Dont worry about it till you need to change a thermostat or something.

Go to mercruiserparts.com they have online diagrams of everything. The cooling system picture is complete with part numbers and descriptions of what everything is. Got it from a fellow OSO member.