I have a 1977 Islander too, and my exhaust
port is not in the transom. I can't seem to upload a picture of my exhaust
port, give me your email address I'll send you a picture of where mine is. If you look at the picture my exhaust
port is actually not through the transom, but just above the waterline and under the rear portion of the hull.
I would suggest putting your exhaust
outlet where mine is.
I have the small Volvo inboard. Maybe your engine needs an exhaust port somewhat higher.
hope this helps.