It really depends on the model of the boat.
I have a 2800 SCR. I run mine on the deck just in front of the windshield, with the exhaust aimed toward the side and back at a 45 degree angle. I close any portholes below and astern as well as the hatch just prior to it. I keep any portholes and hatches forward open. Carbon monoxide is heavier than air and will drop that takes care of taking over the side and down. The prevailing breeze carries it back.
I do close the windshield isinglass of the sides and front completely.
I see many people place them way out front on the bow or anchor pulpit. This would require that every single hatch and porthole be closed while its running. I prefer to keep air moving through the cabin.
I store it on deck and have a cover for it when on anchor or mooring. If I'm in the marina, I keep it at the helm.
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