"did you put a water pump in i
"did you put a water pump in it, if no the do so, if yes then you should have seen the shift shaft when the lower unit was down. Need to remove lower and do this.
Remove lower unit in neutral, verify lower unit is in neutral by spinning the prop, it should move freely and not ratchet(click).
If the lower unit is not in neutral put a pair of pliers on the front shaft of the lower unit(shift shaft) and turn it to obtain neutral.
Re-assemble lower to engine, verify neutral by turning prop freely. The drive shaft should not move when in neutral and spinning prop. Rotate flywheel to align drive shaft splines.
Forward gear=prop should ratchet when turned clockwise. Not ratchet when turned counterclockwise.
Neutral=prop should rotate freely when turned either direction.
Reverse=prop should ratchet when turned ccw and not ratchet when turned cw"