My '01 has the identical Northern Lights generator, located in the same place, ... with the same noise issue.
Some years ago, Northern Lights sold ( and still may sell) a sound proofing enclosure for our gen set. Unfortunately, after a lot of measuring and thinking, I could not see how I could get it into our generator space (above the engine), and therefore did not buy one..
Not sure if Jerry's experience w/ his 356 is comparable to ours.
In any case, the best I came up w/ was covering the genset w/ a couple of sheets of "Noise Control Barrier Sheet" material... available at WM and others. The currently available sheets appear to be better than what I purchased 6-7 years ago... my "sheets" are only 1/2 thick foam adheared to a thin sheet of lead. They help, but the genset is still far too noisy.
This technique of covering the gen-set with some type of noise abating "blanket" is, however, simple, and easy to remove when you need to service the genset.
You might want to google "marine soundproofing materials", etc. You will find a number of companys selling various types of soundproofing materials.
If you come up with a better, reasonably priced solution, please let us know.