1980 Johnson 50hp LU oil leak

Have water in oil. Did pressure test and see bubbles coming from top seal (drive shaft). Also have oil coming from a 1/8 hole just below the screened holes on starboard side of LU. Prop shaft seals seem okay. My questions: what the heck is this little hole, where is the oil leak coming from, and how do I fix? TY

How much air pressure did you use on the pressure test ??

I used about 10 psi but used a bicycle pump w/built in gauge that is not very accurate. BTW this little hole has been showing oil leaking for some time---gear oil.

Take some soapy water in a squirt bottle, pressurize the lower unit , spray all over and look for bubbles. It may have a crack in it in some odd place.

Thanks Boobie. I replaced seals and she holds pressure, whew! But, I have two questions regarding shift rod. Should the jog in the top go forward or back? Won't go back into top yoke and may have turned when I was wrestling it down and up. So, Guess I need to measure length too. My manual gives length but does not tell me if measurement is done in F, N, or R. Also does not show direction of top jog. Thanks

????--------It is measured in neutral.

Yup, I had the shift rod turned a 1/2 turn so it was backwards (these look like they could go up into that Clevis either way but ain't so.) After the 1/2 turn so the jog in top of rod was toward the drive shaft it measured 20 29/32 as it should on a long shaft. Got her all put together, starter back on (yes, you have to remove starter to get to little bolt that holds top of shift rod), filled with oil and will take to lake next week. Maybe do some N. Pike fishing if boat works. Life is good again. Thank you all for the great advice. Will let you know how things go on the water.