There is a cork float in the oil tank which can become saturated with oil and sink which will cause an alarm. If this is the case the tank must be replaced This is something I have run in to, but here are some other checks you can do.
Your answer makes a lot of sense to me. I may have a problem locating the various components. Do you by any chance have a picture of the engine that shows the location of the overheat sensor on the engine? This not be the sensor that connects to the temperature gauge (I suspect that sensor is in fact a variable resistor).
I am also looking for the location of the warning module. Assuming I find those locations, do you have part numbers for these pieces?
I am an EE and I do have a handheld multimeter.
Please let me know.
Your answer was very helpful. I hope you can provide answers to the follow-up. In the mean time I "accepted" the answer.
Thank You Henri
I will be happy to help. Go to this website and find your engine. You can find parts ID and break down . http://www.marinepartsexpress.com/mercury_sch_fs.html . You can also identify the different componets by the wire colors.