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A friend has a 1979 cobalt mercruiser gen 1 and it will shift from neutral to in gear just fine but will not shift from in gear to neutral while it's running. Once shut off it will go into neutral fine. Not sure what would cause this?
The shift interrupter switch is not working right, may be disconnected. Go to the beginning of this forum and click on the "Adults Only" sticky. There is a write up on how the interrupter works and troubleshooting.