An outboard is cooled by the water it sits in, pushed through the powerhead by a small rubber impeller in the lower unit. BoatUS notes that most boat owners have no idea when the pump on their outboard was last serviced, and some don't know there is one. When it fails, the engine overheats, and that can mean permanent damage.
How a surveyor checks it
The tell-tale. With the engine running, watch the small stream from the tell-tale outlet on the leg or cowl. It should be steady. Weak, intermittent or missing means the pump isn't moving enough water, or the tell-tale itself is blocked.
The temperature. Note any overheat warnings on the sea trial and ask about the engine's history.
The records. BoatUS says the manual should give the service interval, but often every other year is about right. An impeller with no record is due.
If the pump is opened. In BoatUS's walkthrough the vanes of the old impeller had taken a set, a bend, after several months in the pump, compared with the straight vanes of a new one. Look for missing or cracked vanes and a scored housing.
What decides the grade
Water flow. No stream, or an engine that runs hot, is an A: don't run it until the pump is serviced. A weak stream is a B. A good stream with no service record is a C.