1996 Johnson 225 alarm

dbiscayne

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I've got a 1996 Johnson 225 Ocean Runner. Has been a reliable engine for the past 2 years, last trip out the warning horn was 'faintly' chirping, on for a second then off for a second, I throttled back to idle speed, horn quit but would come on again faintly at a fast idle then get louder as I increased speed.
Had plenty of oil in the tank, and the engine seems to be putting out enough blue smoke to make me believe it is still getting oil.
Checked out the horn in the binnacle, it had 2 purple wires connected together, 1 tan, and 1 black to ground. The epoxy potting was melted & trashed to the point when I pulled on one of the wires it came out of the horn fitting & all. Replaced the horn, all I could find was a 2 wire setup (1 purple & 1 tan) so left the black hanging there. As soon as I had everything hooked up the horn sounded but this time a steady beeeeep so I disconnected all the sensors (overheat & oil level) to start testing.
Tested the overheat sensors at the cylinder head they both seem to do as they should. As soon as I connect the oil level sensor the alarm sounds, steady beeeep.

Does it sound like the oil level sensor has given up? One thing I don't understand is I did a continuity check from the tan wire going into the oil sensor and the black coming back from the sensor & got no continuity??? These wires eventually get bundled into the harness and disappear under the flywheel somewhere. Could it be something has gone bad under the flywheel, fusing these wires together somewhere and triggering the horn???