1968 Mercury Thunderbolt 650 65hp outboard problems (PLEASE HELP!)

I have recently purchased an older boat with a 1968 mercury 65hp 650 thunderbolt with a mercontrol. I start the motor in neutral just like you would any motor, but the boat/prop move forward. If I move the mercontrol to forward, the prop/boat moves forward, but when moving it into reverse it moves it forward as well at almost the identical speed as in forward (which isn't the motors full speed potential that it should be, only aprox. 10mph). With the motor out of the water I've continuously tried to "play" with the lower unit shift lever and remount the lower unit to see if I could find neutral. No success! When turning the prop, it is not free. I make a hard click in the direction of forward. Same clicking noise happens when the lower unit is detached, with it not allowing me to move the prop in neutral unless forced. I took the impeller of and it appears in good condition. With the impeller off the prop allows me to spin it freely in both forward and reverse. I then slid the lower unit back on without the impeller, and it still stayed the same in forward with the clunking noise and not allowing me into reverse nor neutral. I wouldn't think it would have anything to do with the locking mechanism, but I could be wrong. I may have forgot some details, but I'm pretty sure that's everything I've tried thus far. Please give me advice! Anything is highly appreciated!

-Brad

No need to turn the prop on that motor to go from nuetral to forward.---If going from nuetral to reverse then you need to turn the prop.

Thanks for replying to my message! I'm not extremely good with motors, but am trying and learning throughout this process. I disconected both the shifter and throtle cables. They were in the correct place on the motor, with the shift cable engaging first when moving from neutral to fwd or reverse on the mercontrol. With the cables disconected I removed the lower unit. In the first picture is the lower unit with what I believe is the spline which the shift shaft selects the gears from down in the clutch dog. I've tried "playing" with that, turning in in various position but still can't get reverse. I was able to find a neutral at one point (at least I think), but still no reverse. I would move the little spline on the lower unit and put the lower unit back up in place. My friend would manually move the shifter piece on the track (picture 3) and that's when I was able to find neutral (the prop spun free in both forward and reverse direction). Almost any other time I tried moving that spline to a different position I would just get the "clunking" noise with it only allowing me to spine the prop clockwise in a forward direction. Is reverse suppose to do the same clunking noise in the opposite direction? Am I not doing something correct, or have I just not found the right placement of the little spline piece? I've did some reading about people with bad clutch dogs..Would there be signs if my clutch dog was bad? It's became 24+hrs of frustrating learning for myself..Any advise and/or pointers I highly appreciate. I can post any pictures requested, or even a video if needed. Thanks! -Brad

When you assemble one of these lower units your best bet is to have the shift cable hooked up at the motor and the control in forward.----Then you put the lower unit in forward.--Then you assemble them.----------After you do this correctly you might say----" that was easy "

I think I am just really dumb with this, and will need someone to walk me through it. I put the shifter cable back in place on the motor, and tried moving the spline in different positions as well as the controls from fwd to neutral before remounting the lower unit and all I keep coming up with is the forward clunking when spining the prop clockwise. Before I remount the lower unit, the shaft moves freely in both directions, however the prop only in the clunking clockwise rotation. This happens regardless of where I set the little spline in place at. In order to actually turn the spline so it's able to move freely, I have to slightly turn the prop clockwise and if I turn to too much the spline locks in place. At this point I'm really not sure what I'm doing wrong or why I can't figure this out. I have attached a youtube video of what's going on..not sure if it's normal or if something else is wrong..

In forward gear it will click / ratchet when you turn the prop clockwise.-----Turn the driveshaft to verify the gear you are in !

I figured out that I wasn't probably turning the spline far enough..I finally found neutral, the spline actually clicked into place where I then was able to spin the drive shaft without the prop moving, and the prop actually spins free. I remounted the lower unit and the controls seem to be working properly for forward and neutral, but when attempting reverse the prop "locks up" on me, not allowing spin in reverse on the prop without a compression sound...?

Reverse is different !!----When in reverse you can not turn the prop shaft either way------It locks up both directions.-Just the way it is.

Thanks so much for you time and patience with me!! So appreciated!!

I have since had the boat out and all of my gears have been working just fine (fwd, neutral, rev.). I have always suspected there has been water getting into my lower unit, so I frequently have been changing the gear oil. The last time I was out I had just put fresh oil in and when I went to put it in reverse, it sounded like grinding. I instantly stopped with reverse and put it in neutral and then advanced into forward with no problems. I drove the boat for a little bit and when I got home I checked the oil and it was the worst it has ever been. Usually it may only be a little cloudy, but this time it was almost a pure white. Not sure if seals are bad or what? I am concerned also because I've seen oil come out of both of the holes shown in the picture I attached...Not sure what either hole really is for, nor am sure if that top whole is really suppose to be there??

I also just removed the lower unit and notice some black "coal" like particles around the exhaust tube seal.

Those wee holes are casting cavity drains. Prevent castings from cracking in cold weather.--------Have seen those holes plugged with sand and also with RTV by owners.--They must be kept clear.---------If water is getting in the lower unit you can / must install a seal kit.------Pressure testing is common practise to find lower unit leaks.