So I figured out my problem.
First here is how the water flows inside a Tohatsu M3.5A:
My problem is that the water pump
doesn't put out enough water pressure to push the water up the tube from the pump
to the power head
I found this out by dismantling the motor
hence the picture shown above. I blew air through the passages and observed air flow through the tell tale hose.
Then I pushed water through the tell tale hose and observed water flowing around the cylinder.
Then I put drill on the drive shaft of the lower unit. While running the drill I saw that no water flowed out of the pipe. I could blow through the pipe. I could push water through the pipe. When I pulled the pipe out of the pump and ran the drill, I could see water flowing out of the pump, but with out much pressure. It is possible the drill doesn't run fast enough, but I think the pump is the problem. So apparently replacing the impeller wasn't sufficient to solve this problem.
I'll will continue working on it.