Perkins 4-108s and 4-107s are susceptible to the cooling water discharge into the exhaust being blocked by carbon build up. This will not be easily detected by watching the exhaust water flow. If the engine installation is older than 5 years this is a good thing to check. Removing and replacing the hose is tedious but not hard. Cleaning the exhaust water entry port (into the elbow) can be done with a shotgun cleaning brush. Wear eye protection.
One risk is this carbon build up can also be sealing corrosion leaks in this area so cleaning out the carbon (a must) may lead to the need to replace the elbow. This is not easy. It does not come free from the manifold willingly. I had to remove the manifold from the engine and put it in a very big vise, torch it to get it running temp hot and then persuaded the elbow with a 2# engineer's hammer.
But even before that, one of the most common reasons for over-heating is zinc pencil debris accumulating in the front end of the heat exchanger. When you installed new pencil zincs, did you fish out the old debris? If not you may have several years worth choking off the water flow. If the heat exchanger needs cleaning, treat it like a radiator cleaning job. A short mild acid bath followed by a gentle push through the tubes with a welding rod at least 1/32" smaller than the tube inside diameter. You will need to replace the endcap gaskets/seals.
Lastly a rebuilt/new heat exchanger is $3-400. Replacing it it is an hour job at most -- 4 bolts out then in. Four hose clamps off then on. It is dirty and awkward but not difficult. Anybody who wants more than $600 for the job parts included is overcharging.
