Sorry I am late to the party yes the hose is what you want. Mine had a valve and a plug. the water i found was condensate that settled into the hose. Jam you phone or camera up under the air shroud, I am betting you can see the 4-5 inch round disc that is the screen. the hose should go to the center of it. I would put some warm light weight oil in the engine and observe how fast it comes out.
I have pulled a motor on a kristi, it is fun and leads to a list of *welp, while its out* items. Drain it flush it once or 3 times...... fire it up. see what you have. Air cooled are so cheap and plentifull, just get to building a fresh engine and enjoy the one that is in it.
Why you may ask. the world doesnt need anymore projects sitting around 1/2 apart ( giggle giggle)
I did follow this path and found the 1200cc engine to be a great runner and I enjoyed a full season on it stressing its limits trying to have it fail. it just ran better and better and the oil comes out very clean and very quickly when its warm. Oh the motor I pulled in another kristi.... yeah its still on the work stand.... that kristi doesn't do anything fun, Booh to that path.