I had an 85 hp Merc. with that type PTT back in the mid 1970's. Trying to remember, on that first PTT, shock absorbers were removed from brackets on the engine and engine mounting bracket and PTT cylinders added by Mercury....cheap way to get a PTT out that (probably...didn't check) could be retrofitted to non PTT engines....neat idea. The pump and reservoir were located in the boat....follow the hydraulic lines.
On an engine of that age, I would drain and refill the fluid sump with fresh fluid. Service manual on my engines state that ft the fluid in your unit is red, use automotive ATF...didn't specify type, and if clear, use Quicksilver PTT fluid....Wallyworld sells that in the sporting good section right along with Pennzoil, premium, semi-synthetic TC-W3 for engine lube @ 50:1 ratio.
Once you refill and get through with all that, "burp" the system by running the PTT full up to full down several times. Then check for your problem. If still there, time to replace some orings and valves....Normally something like that comes in a kit.