71 Evinrude Lark 50. It shifted funny once on Saturday, wouldn't go in to neutral. We've had it on the water 4 or 5 times this summer. It was bought about 2 months ago. I started draining the oil and recognized the burnt smell. There were bronze colored flakes coming out of the drain hole and the water had a milky mix to it. It looked blue (I'm not sure what color gear oil is but the new stuff is almost clear) I feel like the guy before us had no idea about these motors and the oil really needed to be changed. I'm thinking about filing it and taking it out Saturday and checking it again when I get home unless one someone here confirms it's in bad shape and needs to be fixed asap! Here's a pic:

What do you guys think?

What do you guys think?