1989 Mercruiser - What is this?

[life_aquatic]

Just bought my first boat. A 1989 Galaxy walk around cuddy. Thanks to the forum for all the useful information I've gleaned in trying to decide on a boat. When I got it home, I noticed something I hadn't seen when checking it all out. The thing on the outdrive in the picture was covered with some sort of silicon sealant (which I'm holding back in the picture). What is it? Why does it appear dinged up? And should I put some fresh sealant on it? (It doesn't look like it should lead - the dings don't appear to pierce through anything)
Appreciate any help.
Darren

 

[JustJason]

Re: 1989 Mercruiser - What is this?

thats pretty ugly.
That round thing is a welch plug for the shift cavity, and it should be water tight. if that leaks your going to have water in your bellows.
Pull the drive and check for leaks.
Wire brush or sand down all your corrosion. It probably be best to mix up some 2 part epoxy and go over that whole area where the welch plug is. At 1 point there was a decal over that hiding it, somebody removed it. then prime and paint the drive. Check your annodes to make sure they are in good shape and don't paint over those.