1979 35hp Johnson motor

Hi All,
I have been having a few issues with an old Johnson motor and I was hoping someone could help me out. First issue is, does anyone know what this small hole is(please see picture)? It is on the opposite side of the lower unit than the vent hole for lower unit grease. It was leaking grease and also water this weekend.

It is a factory installed / drilled hole to drain a cavity so water does not freeze in the winter.

Right, the chamber will collect some combustion residue, but often times a leak from the pesky shift shaft seal. Working on one right now. Got 10 more o rings coming for stock. They lasted a long time but now they're beginning to fail on all these old motors. When you pressure test lower unit make sure the fluid is all drained out and apply about 15 pounds maximum pressure. Next move shift shaft up and down and wiggle it a bit...... there you will often find your pressure leak. I made a tool to tap in to the retaining sleeve and pull that out from the top. it actually doesn't hurt the sleeve and you can reuse it if you don't go all the way down to the bottom.

i have exactly same motor

Upper shaft seal

Yes that's more common, but easier to replace too. If it turns out to be lower unit lube, a pressure test to about 15 psi should be done. While pressure is on, (with lower unit drained), shift shaft should be moved up and down, as well as driveshaft turned, then prop shaft turned. If pressure drops you can test these areas with soapy water. Just did a 15 Johnson 1975, where it was the shift shaft o-ring. Yesterday tested a 1974 15, and all was good.