Excessive smoke coming from waverunner exhaust

Make sure you are using Yamaha oil not an off brand. It does make a difference.

possible seized water pump
the one that is not working
follow it back to the source look for blockages
but personally i cannot see a blockage stopping all water coming out
so i would look more at the water pump

reverse flush it were the water should come out put the hose in there.

Have the fault codes read. Replace faulty items. Use only
genuine items as replacement as non-genuine are not always compatible with the OEM fitted CPU units. This results in the fault codes not cancelling out.

The exhaust light must be blinking. However, running or operating the engine after the warnings had been activated, the light will continuously on. In this case, cool down the engine b stopping it. otherwise, it may result to a serious damage to the engine.

I was raised on a marina and worked at the waterfront for quite a while. I had wave runners, jet skis, boats, you name it.
Whew, that sounds serious. You probably need to take it to the shop and let them run some test on it. Your problem is bigger than myself.

There are indeed traces of oil coming out of the exhaust. Blue smoke is burning oil. Grey or white smoke is usually coolant/water going through the engine. This can be caused by leaking head gaskets, valve guides depending on the engine, excessive blow-by, etc. Large amounts of oil are not good; and water is even worse. I would look at getting the head gasket replaced. The loss of power is because neither oil or water likes to burn, and once your engine clears it out, it probably runs ok for the rest of the day. Then I'm guessing the next morning, it comes back. This is an urgent fix, because prolonged leakage can damage the engine block, head, or both.

White smoke means coolant in the combustion chamber. Most likely a blown head gasket. You will have to tear the engine apart to be sure.

pull battery tray and find the broken hoses

Yes. Those are called power valves. The purpose of those valves is they create a variable height on the exhaust ports. This is desirable because it gives you good low RPM power by keeping the height of the exhaust port low, and as the revs of the engine build, the exhaust valves raise up which opens the exhaust port up and allows the engine to create more peak HP due to the higher exhaust port and larger area of the exhaust port.
There is no additive that will clean your power valves. They have to come out.