Yes, Unfortunately this was a problem with early 350/390's & the Factory tried to stonewall it for years. Your engine & the 3126 CATS, were the big problem. Mainship blamed CAT, CAT blamed Mainship. They were BOTH at fault
When Mainship was forced to change over from the 3116 to the 3126 CATs, for emmissions, which are a much bigger engine, CAT did not have a Exhaust Riser high enough to prevent water backing up thru the in line muffler into the engine, even when running. This led to the factory (if you knew about it) to issue Service Instruction to the Dealers , to add a Surge Tube & elbow from the area in front of the muffler, back to the area, along the stbd. side all the way to the engine. Unfortunately, it didn't work. The only fix that did work was to have someone Fab, a S.S elbow, which barely cleared the underside of the deck hatch. Cost, around 4K, which the factory was unwilling to pay. So Lawsuits, including mine ensued, which, of course, no one, except the lawyers liked. So ,most plugged toe exhaust, when docked or traveled directly downwind ,in a seaway. Fortunately, by now, most owners are aware of the problem & take measures.. The damage to my boat came to about 6K.
Had the boat been able to take a water box muffler, instead of an inline unit & the original design allowed for a larger engine, all this could have been avoided. But, corporate decisions, to save a buck, prevailed over good engineering!.... Ken, Tampa