The problem with cranking the engine with the water on comes from not having combustion gasses to blow the water out of the exhaust. The water-lift muffler will fill up and water will run back in the exhaust valves when it builds up.
To stop this from happening, do one of these things.
Remove the small water hose from the mixing elbow. This will keep water from filling up the muffler. It will simply pump in to the bilge. WARNING: if the engine starts you must shut the engine down quickly, as there will be very hot exhaust gasses in the rubber exhaust hose and it will melt. A minute will be fine, but no longer.
OR.
Simply remove the large exhaust hose from the mixing elbow. This will spew water and from the elbow and won't fill the rest of the system. When it starts, you will have exhaust and water flowing.
Once it starts, you have fixed the problem and you can put everything back together.
Good luck.
rich