Re: Will a lower unit from a '77 Merc 850 work on a '73 850?
Yes, the newer lower unit will bolt right up to the older motor. Note that the newer lower unit may or may not have a preload pin at the end of the driveshaft, whereas your older motor, by the parts diagrams, is supposed to have one.
This feature is used in lower units with a tapered driveshaft bearing. Units without preload pin use a 'straight' driveshaft bearing and don't need the pin.
Whether the replacement is the type with a preload pin or not will have no effect on the motor's operation.
If the lower unit does have a preload pin, make sure the pin is free to move. You can easily check this by giving the end of the pin a stout rap with a small ball-peen or equivalent hammer. Use some penetrating oil to free-up the pin if it's stuck.
HTH...........ed