you're not missing anything there big joe...it's a raw water cooled engine...fresh water cooling,in my opinion isn't really needed on these engines,similar metals.in the time i've been in this buisness,i've yet to see and engine problem related to the engine being raw water cooled.people often make the mistake of thinking the entire engine,including the manifolds are freshwater cooled,this is not the case,volvo engines,the manifolds are raw water cooled-these will need to be repalced in 4-5 season.there's really no advantage in gas engines.
one of the biggest things you can do to keep the engine rust free doesn't involve raw or fresh water cooling,it involves keeping the bilge dry,and giving the engine a little "hose down" of CRC or corrosion block spray-this will keep that engine looking good-remember the pictures of the vovlo engine i removed from this rig,the one i had listed for sale ? that engine was 10yrs old,had great compression and no rust,anywhere-raw water cooled engine too...remember this...