Have you taken a good look at the under water running gear? If it's cavitating that easily, it could be a sign of a damaged prop. Mine will cavitate, but not too easily. After cavitation I could see the knock sensor going off, although mine never has.
Although I think Jim was a little harsh with his first response, (this is the best place for newbie help, after all) the first thing I would do with a used boat is replace the impeller. I change mine every spring no matter how few hours I have put on it, and I always keep the old one in the boat along with a screw driver to fix it. Pretty cheap insurance, and like Jim said you don't want to overheat that engine.