Boat Motor repair

I have taken a boat motor into a local repair shop. The motor is 30 years old and worth about $400.00. It was not flowing water out of the exhaust hole which would cause it to overheat if you run it. The shop said it would be $381.00 to fix. Due to the price being almost what it is worth, I ok'ed the repairs. The replaced the waterpump. This did not solve the problem. Now they say it will be another $400.00 + to fix. Now I'm screwed. I can pay $381.00 for a motor that is still not flowing water. Or pay $800.00 to get it functional (maybe????) I would have never given them the OK. to fix this if it would have been over $400.00 total. Only sentimental value made me make the decision initally. I told them I will not pay $381.00 for a motor repair that did not solve the problem I brought it in to fix. I also said i do not want to put another $400.00 + into it. They said they will take me to small claims court. Am I out of luck????