2006 5hp 2 stroke trouble dropping lower unit

I am in the process of overhauling this inherited motor and replacing the impeller, lower unit is separated and dropped about 6 inches, shift rod is disconnected but something is stopping the drive shaft pulling all the way down. I can see a bushing on the drive shaft in the leg, do i need to unscrew this also? I thought the drive shaft should just pull through but it is sticking somewhere.. any suggests would be appreciated!

You likely have a Long shaft. The bushing is to prevent drive shaft whip. Probably carbon and unburned exhaust on the drive shaft. Give it a still tug, and the crud will probably scrape off at the bushing. If servicing the water pump, install a complete kit, instead of just the impeller.

Paul, yes it is the long shaft model. I will try putting some more weight into it, though I think i may need to jump up and down on the lower unit to get it moving.. There is plenty of crud and corrosion generally as it spent a number of years on the back of a 28' yacht as an auxiliary after main engine failed on a trip from Sweden to Australia.
As it has not been run for 2 years I am tearing it down as a learning experience and plan on doing the water pump service, carb clean out etc. and see if I can get it running again.
The only seized (and snapped) bolt so far has been the anode bolt which I can probably live without given the intended future use a a tender motor.
Thanks for your help,

Good luck Ryan.

And Thanks "pvanv" ! for all your help. I have been reading a lot of threads since I joined this forum.