Success! (I think).
Thanks again for all the help especially Greg on the phone.
I managed to get on the boat today and after a bit of detective work found this:

This is the hose after the impeller pump which goes to a metal Y piece to the block and thermostat housing.
Obviously a build up of salt or calcium which would have taken some time to get like that I think as the plug was over 1 cm long and as can be seen was only letting through a tiny amount of water. The metal piece it went onto was the same. I'm amazed that I had decent water flow at all up to the current problem...
Anyway, a quick clear out and now she throws water out better than ever


I ran her on the dock in neutral and in gear (but didn't go to normal cruising revs in gear) and she seems great, no smoke at all. I will try and take her out tomorrow just to make sure she is good under load and normal revs but am keeping fingers crossed all is good now.
I am going to replace the water hoses with new while I am at it.
So if anyone is getting restricted water flow check your hoses...
Cheers