Hi Gordon and welcome to the forum.
That 380 is far too small for an X40 prop as you surmise. It’s a wonder the esc has not burnt out. A change to an S35 would probably maintain almost the same performance and keep the heat manageable, as the motor would spin faster and not draw so many amps, just as an easy fix. I have the same combination in several boats and on a 15A esc they run ok.
A 28mm brushless outrunner of approx 1300Kv would be more appropriate on the 7.2 battery, reasonably plentiful on EBay. A lot of them are marked “2212” for some reason. A reversing brushless esc will likely cost a bit more than a brushed esc however, but if you can manage with no reverse, a 28mm/esc (aircraft style non reversing) combo can be had for very reasonable price. Look at the “drone” department on Ebay.
Ashley