Re: omc shims
The uppers on OMC stringers always seem to get water in them at some point or another. Since you have it apart check your impeller pump seals and shaft seals. What I would do is drain the oil in the upper, refill it and run on muffs. See if you are getting water in it, if you are then the pump is pushing water into the upper gear case and you have a bad seal somewhere (or a crack in the housing). At least this tells you its not the ball gear seals, because that would only allow water in when the unit is submersed in water. If you have it all apart, inspect the seals, put the pump back together and then pressure and vacumm test the upper. Its easy, they sell hand pumps for this, probably could get it at the local auto parts store or use a bicycle pump with a built in pressure gauge. You will need to get a threaded nozzle that will fit the oil drain hole. This is the best way to find a leak and will save you time and aggravation. Check your water pump shaft for wear, with time water gets in, it rusts and the splines give. If I were you, and had it apart, I would just replace it. Mine was pretty worn.
It seems you are either an OMC (now Volvo) guy or a Mercury guy, similar to a Ford or Chevy guy. Also, some don't like OMC because they are out of business and parts can be expensive. Another reason can be they are just not familar with the OMC drive system and its easier to not like it than it is to learn how to work on them. I just sold my OMC yesterday, it was a good work horse and went 25 years before developing any problems. Only problem I had was the hydraulic rams began leaking and I had to rebuild them, you probably don't have that set up, and I too was getting water in the upper and had to reseal it. I also did have a intermediate shaft seal go bad that I replaced. Other than a few other minor issues it gave me many years of good use. Like with anything, the key is maintenance. I always took good care of it.