MarineEngine.com does not offer troubleshooting assistance or repair advice by email or by telephone.
You are invited to join our public Boat Repair Forum to seek assistance from other members.
You may also visit the Boat Motor Manuals section of our site to obtain a service manual.
If you look at these links to the parts break down you see the shift shaft, the shift shaft bushing (by pieces).
Items 47 -50 are all part of the shift shaft bushing assembly and typically are fully assembled when bushing is purchased new.
The key items are 51 & 52
51 is a rubber washer (sits directly on top of shaft seal)
52 is the stainless steel washer (it sits directly on top of rubber washer) CRITICAL. If missing this would be your problem!!
Once the upper gear case is assembled to the lower, the Bronze shift arm will sit on that stainless steel washer.
If you have this assembled correctly then the other possibility is the bushing in the gimbal housing where the vertical shift shaft passes thru has moved upwards in the gimbal housing (link 2 item 5) This is rare and only seen this a couple times. It moves up ~ 1/8" and you can see a color change in the bushing outside diameter. WHat was in the housing and moved upwards is cleaner than the upper section of bushing which was exposed to exhaust over time.
Note in link 2: Item 24 is a second SS washer that fits on bronze shaft under cotter pin. Not the one that sits on shift shaft bushing (item 52)
Link 1.
http://www.marineengine.com/parts/m...5577-thru-0d469858/gear-housing-driveshaft-mr
Link 2
http://www.marineengine.com/parts/m...e-19831990/6225577-thru-0d469858/bell-housing