Joe,
I missed your first posting so I don't know just what engine you are talking about but here is something in general to consider. As to the seal for engine cover, maybe a seal for a larger cover would work if it was the same profile? I'm referring to the profile as viewed in a cross-section view. If it was for a larger cover, you would have extra length and would need to cut a section out of it to make it fit. This wouldn't be much different than buying some by the foot and cutting to fit?? I imagine the ends could be glued together with automotive weather stripping adhesive.
As to the cooling issue, Is this a "new to you" motor? When you replace the impeller check the impeller housing and seals, also shaft condition where the seal rests. Also check the water tube o-rings, both ends, top and bottom of tube. When you take the lower unit off, remove it slowly and check to see if the water tube is inserted properly into the water pump. Maybe it wasn't lined up and didn't get inserted properly into the water pump during prior reassembly.
One other thing, sometimes when running a motor in a barrel if the barrel or container is not large enough, too much turbulence is created and the water pump will air lock. Removing the prop will help lower the turbulence but even the exhaust gases will put a lot of air into the water being sucked into the water pump, thus lowering the efficiency of the pump.
Just a couple things to consider.