1968 johnson 20hp

i was wondering if any one knew if a 1968 johnson 20 hp had a water indicator or if it exited through exhaust?

Water normally exits through the exhaust on that one. Way easy to see and make sure the engine is pumping. If you really want to there is no reason you cannot add one to the exhaust cover on the side, run the hose up and over the cylinder head (making sure the pump is developing enough pressure to completely fill the bolck) and out the pan. That plastic nipple and the grommet are readily available through any Johnson/Evinrude dealer.