You should do the crankshaft seals pressure test as pictorialized in your shop manual. His oil injection lines may have deteriorated, and be pumping oil into the bilge where it could possibly leak into the mag houseing tru the starter. The pick-up on the flywheel may have broken,
and its common on older ski's to find bits from there & starter bendix shorting or damageing the stator & front crank seal. If his carbs needle
& seat is leaking into the lower case, could be the 'dark'.
It takes three 4" long x 8mm by 1.25 thread pitch metric bolts screwed into flywheel only 1/4" (or you'll be into the coils behind it) to pull the flywheel useing an automotive three slotted harmonic balancer puller.
It is simple. Look for a line at the bolt slot on the 9 o'clock position of the stator when the stator is mounted so that the harness is in position to be clamped into place by the harness bracket plate that goes on over the wires.
Now look at the left side of the case at the stator mounting area by where that 9 o'clock stator hold down bolt goes. See the line in the case ?
After you bolt the mag housing back onto the motor, place the stator in there so those two lines are alinged with each other and bolt down the stator. Bolt the harness bracket back on over the wireing harness from the stator. Place the mag flywheel back onto the crankshaft. Replace the mag cover. Your motor is properly timed.
Stator test
The chain of power and ground for a pre-'97 720 has the ground going from the battery to the block then through the ground wire on the mag housing to the electrical box, so you cannot unplug the mag connector without losing your ground in the electrical box, but you can make a jumper wire to bypass the motor completely by running it from the neg terminal on the battery directly to the stud in the Ebox that has all of the black wires attached to it. Then, you can disconnect the mag plug. If that stops the fuse from blowing, you need a new stator.
Grey Connector
It has a "tooth" between the prongs that you remove. Then push them out of the connector useing a .093 crimp pin extractor, A Detent tool. (radio shack #274-223). In Liew, I have used a metal ball point pen tube, with good results.
This info should get you started in replaceing a part in there!