Re: 1979 Chrysler 75hp lower unit

If air comes out the water intake slots: The rear O ring on the prop shaft spool is leaking. You need to pull off the prop, remove the anode, and unbolt the four bolts behind the anode. Then, using two lengths of all thread, pull out the spool. Now you can remove and replace the O ring. You have the option of buying one from a Mercury dealer or trying to fing one at atGraingers or McMaster Carr.
Although the first photo shows the complete prop shaft/ reverse gear/ bearing carrier/spool, you will not need to remove anything except the spool.
Check the casing to be certain there is no corrosion damage or scoring to leak past the new O ring. If that is the case, you may need to replace the casting too.