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Hit some rocks the other day with our 1989 OMC Cobra with 3.0gm. I now have water leaking from the area on the photo. Outdrive is fine and boat still operates fine. Probably needs allignment too.
Being a 1989, you may find the transom is rotten and the rock hit just mashed in the rotten wood and the transom thickness is no longer sufficient to keep the gasket compressed