I was finally able to get everything apart. It actually worked out better because there was some rust and corrosion inside the bearing which I couldn't see. I just ordered the bearing set to replace.
So after reading the online directions it looks like I've got to press the first bearing all the way onto the pinion then press the second to get my rolling torque for new bearings of 6-10.
My only question now is how do people press these bearings? (hammer down with socket, screw down with bolt)
You got to go over to Harbor Freight and get yourself a 10 ton press. Then you can get some PVC or metal pipe couplers of the appropriate size to use to press the bearings onto the gear using the inner race. Then the spacer and the second bearing gets pressed on but not quite touching the first bearing so that there is no pressure on the bearings.. (If I recall correctly).. You can always refer to the Mercruiser manual for details.
Here is the whole business loosely assembled and ready for setting the rolling torque
Setting the rolling torque with the Seekonk Torque gauge . . . you are tightening the nut on the drive shaft assembly in small increments and then checking the torque (1/8 or 1/16 of a turn at a time)
SInce mine were new (and it sounds like yours will be), I set them to the higher end of the Spec range, figuring that they would wear-in a bit and loosen up . . . If they were not new, I would have set them towards the lower end of the range.
