Hi Rick
Your idea on running in the motor OK.
Stainless steel bolts, washers and nuts.
Nuts to the top with double nuts and a little Loctite.
Glue the bolts with epoxy five minute.
Tank over the COG (about third of boat length from the stern.
I would custom( eg Milo tin) make the tank with baffles and a rear stump with the pickup from that running forward to the motor.
As the exhaust pipe exit the boat on one side I would mount it on silicone tube via bulkhead two and the transom.
A flex silicone tube between the exhaust pipe and the motor exhaust pipe.
Make the radio box on the other side behind bulkhead two.
Solid rod to the rudder and a flex wire in a plastic tube for the throttle.
Speaking of radios, I would replace with a Turnigy IA6 (Hobbyking) and new 4.5kg servos .
About $120au !!!!
These can run 20 model setups and only adding receivers plus servos.
Water ingress, I would totally seal off bulkhead one and add the Fibreglass surfboard foam in block to fill the space.
Add an oiler to both the prop, rudder tubes and found silicone tap grease works OK specially in salt water.
Cooling, pickup between rudder and prop.
Silicone fuel tubing works great.
To trim out motor power, I off setup the prop shaft to the right hand side of the rudder looking from the stern.
Canabus