Re: Resealing Lower unit
Well, Jack, you obviously already have the seal kit so you may as well go ahead and use it.
But, milky oil without the presence of free water draining does not indicate a major leak SO:
In the future, before buying a seal kit, double check to be sure that the FILL, VENT, and DRAIN plugs are tight and not leaking. Also, check the famous shift lever screw on the side of the gearcase. This screw usually has a nylon seal just like fill and vent, only smaller, and it must be VERY tight to seal properly. After verifying these are correct, then you suspect worn seals.
Re-sealing the gearcase is not difficult and should take about the same--maybe a little longer-- amount of time as changing the impeller--if it cooperates.
You must first drain and drop the lower unit. Then, behind the prop, remove the two screws and the anode. You will now see four 1/2 inch head 5/16 bolts with flat washers and small O Rings under them. Remove the bolts and replace the O Rings. Now screw some 1/4 inch all thread into the two anode screw holes and pull out the spool. This may take some doing as it tends to corrode and get stuck.--Factory recommends removing it every year in salt water use. This keeps corrosion from splitting the gearcase.
Once you get it out, there will be a large O Ring in the rear (towards prop) groove, a slightly smaller O Ring in the front groove, and a seal in back (towards prop) of the needle bearing. The rear O Ring is not critical as it merely seals the water pick-up from the negative pressure behind the prop. A little seepage here won't kill you. The front O Ring, however, does seal the oil in the lower unit as does the prop shaft seal. Replace both O Rings and the seal. Use a hook or large screwdriver to pull the old seal. Use an appropriately sized socket to drive in the new seal without damaging it. It doesn't take too much effort to drive. When you replace the spool, line it up carefully with the bolt holes before you push it in (it will be difficult to align when fully seated in place) and lubricate it well with anti-seize so it comes out easier next time. Tighten the four bolts with new O Rings to 160 inch pounds. Replace the anode.
The torpedo shaped plate under the water pump is held on with three 1/4 inch bolts--Careful, they like to snap. Remove the plate and you will see one O Ring around the center, a drive shaft seal inside the center, and another O Ring in a triangular (trapezoidal?) shaped groove at the front of the plate. All three of these seal in oil and keep out water. Check to be sure the front of the plate is not bent, compromising the front O Ring seal. Replace them then replace the plate, again being sure to use generous amounts of anti-seize on the three bolts. You can also use a bit of black silicone RTV on the front O Ring to ensure it seals well. Factory recommends replacing the "crush ring", inside the hole, that holds the bearing in place. If one came with the seal kit, use it. If not, just leave the old one alone.
The rear triangle of the plate seals the water intake passage. It has no seal, but, if you wish, you can also use a bit of black rtv here. That's it -- You're done.
BTW: Be sure to lubricate the drive shaft and prop shaft seals with lower unit oil before installing the spool and plate back on the respective shafts.
All the seals and O Rings are standard sizes and should be available at the local bearing supply store --probably for less than the marina would charge. The choice is yours.