Water got in somehow.
Driveshaft seal, prop shaft seal, shift rod seal, fill and drain screw gaskets.
Possibly water pump gasket.
Always use new gaskets on drain and fill screws.
Easiest, put new gaskets on screws, fill it up, use it, and check for water after a few hours use.
Or, you can pressure test the gearcase, 3-5# of air pressure with unit in tank of water, look for bubbles.