Hi Jacob,
I don't know that model outboard so keep that in mind.
Many engines have head gasket failures with no obvious performance issues so, yes, I would say the head gasket
could cause water in oil with no power loss.
Did the contamination happen pretty rapidly? If so, that might indicate a head to block sealing issue or....worse.
It being used, you have no way of knowing if it was ever overheated in the past. Although, if it's compatible with the Dr.H scan software you might be able to find out. I don't know if that's possible.
I do see something in the parts diagram that piqued my curiosity and that you may be interested in.
This outboard has the thermostat housing cast on the chain case cover which is a bit unusual to me. It also has an "optional" thermostat housing cover and seal as well as what looks like an added spacer as part of the option.
Compare items 24 and 26 in the link below to items 25, 27 and 23 in the link below:
The interesting thing about that "option" to me is two fold:
1. The thermostats are the same for both the "original" and option so the option doesn't seem to be an accommodation for a different set of stats.
2. That spacer increases the height of the chain case. So, it's not solving a clearance problem in the engine bay. As a matter of fact, I will bet that the "optional" tstat cover (item 25) has a lower profile than the original (item 24).
That makes me think that the spacer is altering the internal clearance inside the tstat housing for some reason but the reason isn't for "optional" or "taller" thermostats.
That raises a suspicion for me.
I note that the chain case cover is made of thin cast aluminum.
If something were rubbing against that aluminum because of vibration could it eventually rub through and create an issue? Like water and oil mixing? I don't know.
But....it might be something worth investigating by looking underneath the thermostats.
Just an idea.
Working on outboards we're all at a disadvantage because we can't easily pressurize the cooling system to test for internal leaks. I wish I had a solution but I don't.
Sometimes you can identify water intrusion into a cylinder by closely inspecting the spark plug. A plug that looks much different from the others, especially if it has a "cleaned off" look, could indicate a water in cylinder condition.
Good luck.