Re: Johnson 1985 8hp motor lower unit leak/repair
Any place were oil is leaking out is also likely to allow water in. I did not mean to imply that ingress of water would necessarily point to the seals The most usual place for water to enter is via the prop shaft seals as they are the most likely to become damaged, eg. by fishing line. You will notice from the diagrams that at both places there are two seals facing in opposite directions. That is because the outer one is intended to keep water out while the inner one keeps the oil in. It only needs the outer one on say the propshaft to become worn or damaged and water will get in there but oil does not escape unless the inner one is defective. The same will apply to the two seals on the drive shaft, below the water pump but being relaively well protected they are much less like to be the cause of problems.
I felt that from your description of the location of the oil leak that it was more likely that it was the gasket, item 14 in the diagram, that was causing your oil leak. It will almost certainly be allowing water into the gear case as well.
I assume that the plastic block you refer to is item 25 which is called "Gearcase cover and seal" It is in effect the top of the gear case. It has oil below it and water above it.
It is difficult to know why that gasket is leaking oil, maybe it has been disturbed sometime in the past and reused instead of being replaced.
It should not be difficult to gently lever the "plastic block" out without damaging it once all seven bolts through it are removed. It is a fairly solid lump, not particularly fragile. The shift rod, item 39 will lift away with it so you will need to take care when rebuilding that it engages correctly with the cam, item 29.