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Mercury leaking sludge. Please helo!

kgr28

New member
Hello,
Im helping my grandfather get his old outboard on his boat going again. Its a mercury 40 hp (1995 I think). Four cylinder, two stroke. We cranked it in a trash can full of water and the water got very sludgy/oily after running. Like lots of it. There is the milky green sludge coming from what seems everywhere on the lower unit area. I pulled the lower unit off and it's all in the cavity that carries the exhaust to the lower unit. Naturally I thought it was the lower unit seals leaking. So i pressure tested it and it held 10 psi for 5+ minutes with no movement in the needle at all. So I think I've ruled out leaking seals in the lower unit. And moreover the sludge does not smell like gear oil at all.

What else could it be?

It seems to me to smoke quite a lot, even for a two stroke. Could the oil injection be throwing too much oil? Is the oil injection adjustable? Or is there some other problem happening?

Any help is much appreciated.
Thanks.
 
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