Back to task... lol
1) I noticed there are a couple different procedures for the merc lowers depending on which type it is.
Did you figure out which type you have based on that manual link? Is it Type B?
It talks about shimming etc to maintain proper pinion lash or something. Another type, you don't have to do that.. :noidea:
As for aligning the impeller vanes, all I've had to do on mine, were to put impeller key on drive shaft, put impeller on drive shaft fitting over the key, then lube the inside of the housing with petroleum jelly, or a touch of grease, then place the housing over the driveshaft till it sits on top of impeller, then press downward on the housing while rotating drive shaft CLOCKWISE.. This set the impeller into the housing properly.
2) I put some marine grease on the drive shaft splines, but be careful NOT to get any on the very top of the driveshaft.
Too much on the top of the shaft, and the lower won't go in all the way because the grease is trapped at the top.
It really was that easy on my end, but again... I don't have a Mercury..
That link I sent you, if you go further into the pages it talks about water pump assembly and then lower installation as well.
Just need to be reading the section for the right "Type" of lower.
I ask the gurus reading this, to add/correct/confirm this...
Hope it helps!