On these engines the cooling water goes into a mixing elbow at the back of the exhaust manifold, then the exhaust and water go to the muffler after which it's expelled with the exhaust.
btw if this is a used engine you're installing it's worth checking the condition of that mixing elbow now. This is an area that is prone to corrosion and failure (esp if it's been in salt water)
If there's a line coming from your "extra" seacock, now's the time to figure out where it goes and what its for!
1984 Fast/Nicholson 345 "FastForward"
".. there is much you could do at sea with common sense.. and very little you could do without it.."
Capt G E Ericson (from "The Cruel Sea" by Nicholas Monsarrat)