Hi my name isXXXXX will assist you.
The only way water can get into the cylinders on these engines is a blown head gasket or a hole in the cylinder wall. Now since this is a new engine the head gasket would be the only real place as it is not old enough to have a hole in the cylinder unless it threw a rod. I would check the compression to see what kind of readings you get. The other thought is do you really have water in the cylinder or is this just a rusty spark plug. So the first thing to do is the compression test. The compression should be 100+ psi with no more than 15% difference between cylinders. If one cylinder comes up low remove the cylinder head and inspect. If the compression is good run the boat see how it performs. If performance is good use the boat if performance is down we need to go further.
Hopefully it is the gasket. The friend said the engine runs pretty well without allot of vibration or noise. I have not run it as I did not want further damage.
I appreciate your help. It is nice to know that you are around to answer my questions and that the problem may not be catastrophic. Since I am not an mechanic, I will get someone who is to check the engine.