The "arm" mounted to the bottom of the boat is sitting correctly, right? A few times we've had our work it's way up due to the straps in the lift or something. When it does that, it won't ready anything. The simple solution was to push it back down. That's about the only problem I've ever had with one.
Trace the tube for a pinched spot. If all good then blow a little air into the tube fitting on the back of the speedo, DO NOT HOLD AIR GUN AGAINST THE FITTING, you could damage the diapham. Hold it 1-2" away and pass it over the hole, don't give it full pressure. The key switch will have to be on for this.
I Noticed U Said Pin Hole In Motor. I Have A Suzuki 140hp. Pin Hole In Lower Unit Is My Speedo Pick Up As Well. I Wounder How Much Mud Is Packed Into The Pickup. Bad Desine. If You Do Get It Clear , It Will Just Get Clogged Again.
Have you had water pump work done lately? On Yamaha's you have to disconnect the speedometer pick up hose to drop the lower unit. At least two things can happen. Someone forgot to reconnct the hose or maybe the broke or bent the plastic fitting inside the lower unit that goes to the pickup when reassembling the lower unit to the engine,