Originally they were installed with the rubber facing inward to keep the oil from leaking out,but as the prop shafts grew older it sometimes worked better with the rubber facing out.
Nowadays they often leak a bit no matter what direction you put them in and for my 1964 9.5 I put 2 of them in there, one inward and one outward, back to back.I can do this because the seals sold today are a bit thinner than the ones from 50 years ago.