Thank you everyone for your comments and insight. I'm to the point of deciding whether to keep the shaver or not. If I do keep it I will probably take it apart this spring and do the following.
1. Remove the water jacket and scrap the whole water jacket.
2. Add holes to the back fire box support so water can circulate.
3. Re- route the flue so it goes horizontal in the water then turns up. Will have to add a clean-out flange or two.
4. Install proper legs on the unit so the underneath side can be insulated.
5. Put a new water jacket on probably out of Stainless Steel if I can talk the neighbor out of a half dozen sheets he has laying back behind his shed.
6. I will probably increase the size of the water jacket also, and design it so that the water jacket is completely full of water, no gap.
Or Go buy a WoodMaster or Central Boiler or something comparable. If I do buy new I will defiantly be looking for something with a 1/4" thick fire box. I don't know what I was thinking buying something with a 1/2" fire box. I've worked on, ran, and maintained High Pressure Steam Boilers for years. With steam you want thick steel. These are not pressure boilers, and I should have known better, they are simply a wood fired water heater, thinner steel equates to more efficient ( heat transfers to water before going up the flue).