Re: 65hp Mercury lower unit problems
Doug, the 'rod' you see is the shift plunger. The shift cam has moved forward in the gearcase, out of sight. If you carefully rap on the nose of the gearcase with a rubber mallet you may be able to jar the shift cam back into position.
You'll know when it's back because you'll see either the edge of the shift cam, the edge of the hole in the cam, or the "whole" hole, visible with a strong lite down the shift shaft cavity.
The cam has internal splines in it, so you'll be able to tell right away that's what it is. What you want is that splined hole to be perfectly lined up so you can get the shift shaft right back in it.
Note, be sure the propshaft is on the 'ramp', i.e. right before the 'click'. If you let it go past the 'click' you can't get the shift plunger to go 'aft' into the middle of the propshaft. And this won't allow the shift cam to move aft, either.
So, try positioning the prop shaft and give the front of the lower unit a few good whacks and see what happens. If you tilt the lower unit up a bit, it'll help the shift cam to move aft. It might be that there's still a bit of gear oil holding it in place, so I'd spray some more cleaner down there and swish it around.
HTH.........ed