Re: War with lower unit
An amazing amount of corrosion! You're definitely gonna need to get all the loose scale/corrosion off the driveshaft, or you'll never get a new impeller on the shaft. A carbide scraper will work, for the tough stuff you could use a file. Be careful using power tools such as a grinder, you don't want to remove any good metal that's left!
Far as the stainless O-ring carrier goes, all you did was pull it out of the end of the crankshaft, if it'll tap back in there and stay tight, it should be OK. It doesn't look to be deformed. Be sure to replace the O-ring inside. I'd spread a thin coating of Permatex No. 3 Aviation-type gasket dressing or Loctite (Blue or Red) on the carrier where it engages the crank.
Be sure to clean up the end of the crankshaft as well and inspect crank splines. It's just incredible the driveshaft splines weren't all rotted away, guess the updated design of that carrier/O-ring did its job!
You going to get the upper shift rod removed from the lower unit's shift before you reassemble? It'll make it so much easier the next time you drop the lower unit for an impeller renew. Careful application of heat should release the aluminum coupler from the shift shaft.
You'll probably want to split the black plastic reverse lockout guide and get it outa there, otherwise it'll catch fire and make a bunch of nasty fumes (been there, done that!).
Come to think of it, since you're putting power tilt/trim on the motor, you won't need the lockout rod, plastic guide, or shift cam installed. The PT&T cylinders lock down the motor effectively when reversing, so all that stuff is extra parts.
Once you have the plastic out of the way, it'll be easy to heat up the shift coupler and separate it from the shift shaft. Clean up the shift shaft splines so they'll smoothly engage the coupler. You may have to scrape out the internal splines in the coupler as well.
As I recall, the shift shaft is in pretty bad shape and may need replaced. You'll be able to get a better look at everything once all the pieces are separated. There's a special Merc tool for the shift shaft bushing (which holds the oil seal), but if you grind a couple of "tangs" into a deep socket, it'll work as well. Here's a link for the tool, so you know what it looks like:
Mercury 91 31107T Shift Shaft Bushing Removal Tool | eBay
You'll probably need some heat around the gearcase to get the shift shaft bushing to break free. Standard right-hand threads on this.
Gotta luv those Salty Dogs, eh?
(Note: I started writing this before you posted the new pics. Like the O.P. said, no point turning on a lathe, for the driveshaft you've just got to be able to get a new impeller down the shaft. Thank Goodness the pump area is stainless! Be sure the stainless O-ring carrier slides on the shaft easily in the area of the shaft where the O-ring will ride when it's all back together. Fortunately it's just an 85hp, so it's not gonna twist that rusted shaft in two. If this was a 150hp, I definitely wouldn't use that lower unit!).
HTH & Have Fun with the Prep and Reassembly!...........ed
