Hard to say if you have a coolant air bubble big enough to effect heat exchange without seeing a diagram of the layout. But here are some notes to guide things:
The reservoir is an expansion tank designed to allow coolant to expand when hot and contract as it cools without impacting the pressure inside the coolant circuit BEYOND THE LIMIT set by the radiator cap, which is a pressure check valve. That’s usually set by design at something like 8-15 psi. The reason is that the boiling temperature of the coolant is higher under pressure. Beyond that pressure some coolant can escape to the reservoir, and when the engine and coolant cools and contracts, it can be pulled back in, since the cap is also a check valve and only pressure restrictive in one direction.
What that means is, if the hose connections between the radiator cap (on the engine, there is no “radiator” but it looks the same as a radiator cap) -that hose needs to be air tight between engine and reservoir or air can be sucked back into the engine instead of coolant, or if the reservoir has not enough coolant, same thing.
One way to potentially remove air and fully charge the system with coolant is to open that radiator cap so air can escape. If there are any points in the system of coolant higher than the cap, (not counting the reservoir circuit which is often higher) they need to be cracked open too to let the air out. Simply having coolant in the reservoir will not allow it to flow back into the engine because there is some resistance at the radiator cap check valve, it normally gets drawn in by the vacuum of the contracting coolant as it cools off after shut down. Under normal circumstances, several cycles of heating and cooling usually self purges the air from the coolant system automatically, the bubbles escape to the reservoir, come out the top as air, and coolant gets drawn in during cooling phase after shut down. For all that to work, the hose connections need to be air tight and the radiator cap functioning properly, but they rarely fail.
it should be possible to feel the coolant temperature entering and exiting the heat exchanger to see if it’s at engine temperature. If it is, the likely culprit is the seawater flow through the exchanger, either restricted coming into the boat from the through hull, or from bad pump flow through the raw water pump, or a restriction at the mixing elbow. Barnacles, dead minnows, seaweed, can all restrict inlet seawater supply. Easy way to check that is to disconnect the seawater hose going INTO the heat exchanger and start the engine and see how much flows. Should be a lot! If it’s dribbling or something, that’s no good. If it’s a strong flow, the next check is the house OUT of the heat exchanger, since the internal tubes can clog up.
A high point in the sweater hose should not matter if flow level is adequate, the water would just push the air out.
A fairly sudden change in cooling function is most likely a seawater flow issue. I’ve had a little blob of seaweed get stuck in the intake of the through hull and instantly the engine behaves as you describe. Happened to me just this season motoring away from the dock through some floating rotting eelgrass. 2 minutes later I noticed steam in the exhaust, and temp was up around 200, way more than normal. There was flow, but not nearly enough, I had to run very slow to control the temp coming back in. Had a diver clean my intake screen, all was well. Made me want an alternative intake system plumbed in, maybe via the sink drain?
Bottom line, verify seawater flow first, it needs to be really strong flow all the way through to the water lift muffler. The mixing elbow hose (seawater coming from heat exchanger) is another easy place to verify flow of the whole seawater system, but only test that by disconnecting and dumping into a bucket for a couple seconds of course.
My guess is your inlet is clogged, or seawater pump impeller is shot.
