It certainly will.
The red flywheel cover appears to be correct for the GM V-8.
You will also need;
..... a 153 tooth ring gear flywheel that fits your crankshaft flange.
..... a starter motor that works with the 153 tooth. Get the HTGR/PMGR motor.
..... a Borg Warner drive coupler that will bolt up to the flywheel.
You will eliminate the OMC ESA system.
I don't see a Y-pipe in your photo.
The Y-pipe must be correct for the transom shield... i.e., single exhaust relief or double relief.
Your exhaust manifolds and Elbows must be correct for the Y-pipe style.
I.E., a single exhaust relief Y-pipe (3" style) or the double relief Y-pipe (95mm style).
If I could see the interior of the transom shield, I'd be able to tell you which one.
In my opinion, you would be making a wise decision, and you won't regret doing it.
No more Dog Clutch.... no more ESA, just nice smooth gear engagement.
A few more things:
The T fitting in the spent seawater circuit, must to have a diverter web in it's interior.
(yours may..... I'm just pointing it out)
The Volvo Penta exhaust manifolds receive seawater from the front area.
Also, as an FYI....... the VP exhaust DOES NOT use a Riser/Spacer.... Manifolds and Elbows only.
The AQ series Volvo Penta drives do not incorporate a seawater pump.
This means that an engine located seawater pump becomes necessary.
Also..........
And, you will want to replace the PDS bearings within the flywheel cover.
Easy to do, and it is not expensive.