FYI - this is what my Merc service manual for a '97 50hp says about the Warning Alarm circuit. The text in blue color tells you how to troubleshoot it ... and I would imagine/guess (but can't confirm) that the alarm logic is similar throughout all Merc OBs - models and years.
Warning Module
When ignition key is initially turned on, warning module will briefly provide a self test of its engine overheat warning system – a brief steady BEEP tone, followed by a self test of its low oil warning system – a brief BEEP-BEEP tone.
- If the oil level in the oil reservoir drops to less than 7.5 fl. oz. (225ml), the low oil (float) sensor in the oil reservoir will signal the warning module to activate the warning horn.
- If the powerhead temperature should exceed 300-deg F (65-deg C), the overheat temperature sensor in the water jacket cover will signal the warning module to activate the warning horn.
If warning horn sounds a continuous “beep”, the engine overheat sensor may be faulty. Disconnect tan/blue overheat sensor lead at at bullet connection. Turn ignition key to “ON” position.
- If horn still sounds a continuous “beep”, the warning module is faulty. Replace module and retest.
- If horn stops sounding, the engine overheat sensor is faulty. Replace and retest.