Need Help with 88' Cobra Outdrive

[Notlovinmyboat]

A few months ago I purchased an 88 Bayliner with a 2.3 Ford and an OMC Cobra outdrive. The first time out the points went bad, I fixed that and they were fine. The second time out the water pump burned up, also burned both exhaust bellows, melted the shift cable, melted the throttle cable. After replacing the gaskets, shift cables,throttle cable, bellows, tightening up all hoses.... I fire it up and it all works great. Except one problem, I now have water in the lower unit. I tested it with muffs on not wanting to take it out again and get stranded. I put 2 quarts of new oil in before I ran it and ten minutes later drained out almost 3 quarts of oil and water. So my question is the obvious.... what did I overlook? Why do I have water in the lower unit?