It's a magnet designed to pick up any metal filings floating around in the oil and keep them out of the way. They're dropped in loose from the top but I'll have to check tomorrow to see were yours is supposed to be.
Those were used in the 66 through 68 100 HP electric shift lower units.----They were also used in the electric shift sterndrives.----------Some one added that to your lower unit to act as a filter for metal parts.-A very good idea.
