Re: somebody has to have the answer
That's a tough one. I'll give it a shot. Sounds like there is a leak between the block and the driveshaft housing??? Look at the following diagram.
Water is pumped up the water tube (#5) and looks to be attached to the exhaust tube (#6) with items 1 - 4. Item #4 is a rubber seal. There is a gasket (#8) between the exhaust tube and the lower plate (#9). The block is probably bolted directly to the lower plate. I suspect that there is some type of RTV silicone sealer between the lower plate and engine block.
Problem may be seal #4, gasket #8 or seal between the block and lower plate. Could also be cracked lower plate, maybe crack in lower part of the block. Then again, it may not be any of the above mentioned areas. Just some ideas. Hope that helps. Maybe someone else can chime in.
http://www.crowleymarine.com/mercury_parts/1696/16.cfm
