1989 NS50C - lower unit

I have this NS50C that has been working fairly well. The last trip out we ran into a problem. Seemed to run well but when it was put into forward the engine rampped up as is should but no thrust from the prop. After pulling it back from the water and the engin off, I could see that in neutral the prop would spin freely, in forward the prop would spin with some catching and in reverse seemed to be froze. When I got home I pulled the prop, checked the oil and found the lower unit oil to be milky... not good. I had the hub checked and the prop is good. So now the search begins for lower unit parts. Can't seem to find any. Ya'll have any ideas? I only paid 2 grand for the boat, can't seem putting a new motor on it.
RSHouston

You need to diagnose the motor. The action you describe, of the prop freewheeling in N, ratcheting in F, and locked in R is 100% perfectly normal. Perhaps it didn't actually go into gear... such as if the shift cable or linkage came apart. Yes, you may need new LU seals, but modern synthetic LU lube can tolerate some water in the lube without damage.

Thanks Paul
That's actually really good news. Looks like a project for this weekend. Now that you mention it, there used to be some stiffness in shifting into forward and when this all went down it was pretty smooth, almost without resistance. Very possible a linkage problem.