If you are getting back-flow through the vent on the "vented loop", it is likely you have an obstruction between the vent and the through
hull that is preventing the free discharge of
cooling water which "back's up" in the loop circuit. If the generator is not run often (most aren't), you could very easily have critters "growing" in the discharge line, not unlike the build-up of material in the arteries. One can check, to some extent, by freeing the discharge side of the loop from the vent and inserting a simple cone nozzle from a garden hose into the hose end. If the discharge hose is "clear", water from the garden hose should blow through quite easily, if not, it too will back flow into the boat around the cone. Should that happen, you might try closing the sea-cock at the thru-hull, draining as much water out of the discharge line as possible (if necessary using a 1/4" diameter tube inserted into the discharge line as far as possible and the suctioned out with your shop-vac, and then refilling the discharge hose with a solution of Barnacle Buster or RydLyme and water and allowing that to site over night. Either of those materials will dissolve any hard-shell critters and kill off any other growth. Then, open the sea-cock, and wait another day (the mixture will clear whatever may be growing on the ocean-side to the sea-cock). Finally, reinsert the cone end from your garden hose, and blow out the line with fresh water. If "growies" are the obstruction, the foregoing will clear them out pretty effectively and get you back in business. (BTDT--Got the T-Shirt)
FWIW...