Re: water leak in lower unit
another seal where the lower unit connects to the motor, etc...
Actually , there is not a seal there. No need for one.
There are 5 possible sources of water leakage into the LU.
1) fill plug sealing washer
2) drain plug sealing washer
3) prop shaft seal
4) shift shaft seal
5) lower waterpump housing o-ring and driveshaft seal
So, take your pick. Without pressure and vacuum testing the LU it will only be a guess. I would start with the cheap/simple approaches first.
Replace the sealing washers under the fill and drain plugs. Make sure the old ones come out with the plugs, sometimes they stick in the recess. If that doesn't fix the problem then its a shot in the dark approach. I've had two motors where the shift shaft seal leaked. Part is cheap and relatively easy to replace (need special tool or make your own). At the same time I would replace the two seals and O-ring in the lower waterpump housing.
What year motor are we talking about? Older 60's and early 70's Mercs used mild steel driveshafts that corroded badly in the area around the waterpump. Possible that the seals may be leaking there.