OMC Stringer Sterndrive 140

Im hoping somebody can help me figure out what is wrong with my engine.
The engine would not go into reverse and in forward it puttered. At first I thought it was the throttle cables, so I changed them with new ones. Then I noticed the lower unit cables weren't moving freely, so in took down the lower unit and cleaned the and reset the pulleys. It was very dirty and clear that water had gotten in so I replaced all the seals.

But before I aligned the rack and the shift rod back on the lower unit, I saw that the rack and rod weren't moving very much. At first it wouldn't go into gear at all, but I sprayed PB blaster on it and let it sit and was able to get it into forward, but still no reverse.

Any ideas on how to get this engine shifting into both forward ans reverse??

Note-----I do not believe type-C oil is correct in that unit.------If it had a lot of water in it you might as well tear it all down to inspect gears and bearings.

prime suspect would be water pump shaft splines stripped. They only last 200 hours or so. could also be coupler or prop

Type C will be fine in a 1980- you just paid a bit more for gear oil than you needed to

The true culprit is the UPPER SHAFT splines which first, corrode and then strip out taking the water pump shaft splines also. Lasting 200 hours in salt water is about right. The way around this is to rework a used stainless steel water pump shaft with good lower splines.