Merc uses a twisting cam arrangement on a lot of the engines. The splined shift shaft protruding from the top of the lower unit is connected to a pivoting cam with 3 detents for FNR. The detents are at a different distance from the pivot point forcing a "cam follower" pin inside the front end of the prop shaft to move up and down the inside of the prop shaft to the corresponding position. This movement is spring loaded and pinned to a sliding gear called a clutch dog which does the actual engaging as it is forced up and down the prop shaft. It's pretty bullet proof if you keep your lower unit oil clean and waterless. How's yours?
As I recall the rear bearing carrier, which is immediately in front of the prop, is retained with a spanner nut threaded to the inside of the LU housing. The last time I removed a prop shaft I just got a piece of pipe and made my own turning with a strap wrench to remove the nut. Need to clean up the exposed threads with a wire brush and apply lots of high quality penetrating oil first.....wasn't easy for me to get mine out due to corrosion.
Once the spanner nut is backed out/removed, you can grasp the ribs of the bearing carrier and pull it out...a sliding hammer tool will be helpful....Harbor Freight has them. Once out the prop shaft will come out right behind it if it didn't come out with the bearing carrier assy.
Now, how about a picture of the prop shaft and clutch dog. We'll go from there.
Mark