I actually found the problem. The gasket between the exhaust manifold and the elbow at the end of the manifold for the sea water port going into the exhaust was leaking. That elbow has internal ports that circulates fresh water through it and exhaust soot was getting into the fresh water system, which looked like oil in the water. When the black stuff in the water settled out to the bottom I realized that it was soot and not oil. Changing the gasket fixed the problem.