That temperature switch is not shown on a 1959 model.-----Is the serial # on the block the same as on the transom bracket?----Could be a 1961 powerhead ( 40 HP ) I believe.
Too far away for help from a supply of used parts here.----Perhaps a slide hammer to gently help it out.----All bearings including the ones on the reverse assembly are likely scrap too.
Cleaned high speed jet found in bottom of float bowl?---Perhaps run with another tank and hose.----O-ring on fuel line connecters in good shape?------Checked fuel pump diaphragm?----Perhaps run with a timing light one cylinder at a time to see if there is a spark issue,-----This should be easy...
???----It has a stainless drive pin.----And if an 83 commercial 40 it has a rubber hub in the prop.-----Your model # is ?-----Surging is often caused by a fuel delivery issue.-----Check hose fittings and pick-up tube inside the fuel tank.
The lower housing must be separated entirely.------There will be another step to loosen the blue wire.-----The clutch spring does not fly at all.-----Removed the big circlip?--disconnected the blue wire?------What is this lower unit doing / not doing?
Does spark jump a gap of 3/8" on each lead?---Orange / blue stripe wires on top coils?------Flywheel key checked?-----Flywheel magnets checked?------Reed valves checked?-----Looked into issues with crankshaft sealing rings?