1999 502 MPI MAGS on different parts websites show both a full flow elbow gasket merc # 863726 , and also an 863724 "restrictor" gasket which only has small holes instead of slots in two sides of the gasket. Why is this optional gasket needed, or not? I understand it's to restrict flow in the manifold to keep it full of water. Which should I use.

Ayuh,.... Merc has used two systems, the warm manifold system, 'n the cold manifold system,....

The T-stat housin's are also different, so replace what you've got now, with copies of what's there,....

Otherwise, you'll be havin' coolin' issues,...

Actually Mercruiser has 3 types of riser gaskets for NON DRY JOINT EXHAUST MANIFOLDS & RISERS. ( like what exhaust manifolds & risers should be installed on the stock Merc apps for the 502 and 454 and other apps down.) More info on top of to add to the mix.

1. There is a closed cooling system - riser gasket that is just a gasket with no water jacketed openings

2. next is all open water jacketed riser gaskets for manifold / riser block extensions that are installed in between the riser and exhaust manifold to raise your water line height to prevent water reversion and in some cases installed because of locations ie: thru transom exhaust placement and so on. Also this riser gasket is widely used for the cold manifolds cooling set up.

3. next is the riser gasket that has the 2 fully opened water jacket areas and the 2 tiny hole restricted area (gasket app) - this is for standard cooling apps meaning stock - T-stat - stock T-stat housing (warm manifold style t-stat housing ) - stock manifolds & risers, stock cooling hose set up. Also this riser gasket is widely used for the warm manifolds cooling set up.

Bondo I don't want to trust what's in there now as I don't know if they are correct. Probably been changed numerous times. not a good thing to do that.

BUP
I understand what your saying but don't know whether I should have the warm or cold manifold system. How do you tell.
I have stock manifolds and elbows, no extensions. But not stock thermo housing. Not the tower type > besides the water inlet and the outlet to the recirc pump, it's got just the two hoses going to the bottom of the exh manifold and that's it. None to elbows.

I FOUND THIS MERC BULLETIN:
1) Raw water cooled engines with all the water from the thermostat housing going to the 90-degree fitting on bottom of the exhaust manifold:
Use P/N 27-863726 Gasket – 4 Slot between the exhaust manifold and the exhaust elbow.

2) Raw water cooled engines with the bypass water from the thermostat housing going to the fitting on the exhaust elbow and the warm water from the thermostat housing going to the 90-degree fitting on bottom of the exhaust manifold:
Use P/N 27-863724 Gasket – Restrictor between the exhaust manifold and the exhaust elbow.

It appears I have a cold manifold system as the water only goes to the exh manifolds. thus the full flow gasket. 863726,
You agree?

Also, what is the purpose of a "warm" manifold system? some people talk about condensation in a cold manifold, thus going to the warm system. Any other benefits?

Can you post the # of the Merc SB so I can pull up as well. I remember it but not the # of it. Sometimes the SB's have diagrams (pics) as well I can refer back to you since you have seen the SB. I will try to find something or a link to post showing the difference in the T-stat housing and cooling set up from cold to warm manifolds, rather than me typing and understanding what in the heck am talking about.. .

One of these links should do it.
Service bulletin 99-10

http://www.boatfix.com/merc/Bullet/99/99_10.pdf
I understand the bulletin I found so it looks like I should use the full flow gasket and have a "cold" system. question is what are the benefits and reason that maybe a warm manifold works better? simply by changing the gasket.

would post a pic but it ask for a URL address, like a website. I just want to insert a pic or copy and paste it here from my own cdrive. How can that be done?