Charge the battery and have it load tested.-----Take starter apart for inspection and ohm test on armature.----No $$$ spent to do that.---Have to ask.-----You are pushing the key in and holding it in while cranking ?
Type C was for electric shift.-----But for a few years it was used on all OMC models.----And listed on those stickers.-----Use any quality outboard gear oil in that 1968 big twin.
That would be a 90 degree crossflow.-----These motors are famous for broken piston rings.-----Do a compression test for future reference.----Post your numbers here.
Intake / bypass cover is on the starboard side.----No water there.-----You need to address this issue YESTERDAY !!----Water on the bearings will destroy the engine quickly.