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My mechanic gave up! Need HELP!

Before you replace things, make something turn. The whole drive can be made to turn by putting a wrench on the flywheel nut and holding the propshaft with the tool and another wrench. If it doesn't turn while shifted into gear with a lot of torque, there's nothing wrong with that part of it, mechanically.

If the new lower has little use, you should be able to get a decent price for it, rather than losing your shirt.

Do you hear any strange sounds when it loses drive, like grinding or clanking?

Contact Merc technical support and find a well-trained and certified servicer- before leaving it with anyone, ask A LOT of questions about rtaining for the service techs. The dealership SHOULD display the diplomas for anyone who works there and passed the training courses and hands-on training. If you see more names than mechanics, ask who has left- many dealers display all of the diplomas whether someone works there, or not.

Ask the dealers if any of the mechanics has worked for a manufacturer- some have and they move around the country after they leave.
Thanks for your smart advice. I do have faith in the guys that are repowering my boat. The drive that was on it was absolutely fine. The new one has less than 10 hours on it. There was some weird fuel injection issue with this 2 stroke Yamaha, an HPDI model.
 
I'm pretty sure any new motor would cure this, but....
I went through all kinds of major steps and expense to fix this. I used a master mechanic and wasted a lot of time and money- I would say over $5000 in parts and labor. To no avail. The hours on a motor mean nothing to me now. It seems like in this case it was more about the age (19 years with less than 600 hours) and running the crappy ethanol fuel through it for years I am sure.
 
Finding a shop with a dynamometer might have helped.----That would test operation / power output of the motor.----Takes mystery of the boat and water out of the trouble shooting.
 
I went through all kinds of major steps and expense to fix this. I used a master mechanic and wasted a lot of time and money- I would say over $5000 in parts and labor. To no avail. The hours on a motor mean nothing to me now. It seems like in this case it was more about the age (19 years with less than 600 hours) and running the crappy ethanol fuel through it for years I am sure.

Ethanol is bad, but typically, only if it hasn't been treated properly, has been left in the tank and fuel system for a long time and the engine has been run with bad gas. It has a distinctive odor, so a whiff from the tank should result in draining and refilling, cleaning if necessary. Ethanol isn't so new that nobody knows how to use it in fuel and maintenance/service isn't much different from non-Ethanol fuel.

Fuel systems in boats and cars that aren't more than 30 years old were designed for its use. Some parts don't like long-term exposure, but the rest are OK, including ECMs in the injected models. They have a knock sensor that pulls the timing advance back until the knock stops but there should be no "RPM increases without a difference in power". A vacuum leak without adding fuel or loss of compression could cause this, in theory- has the idle speed ALWAYS been stable after this happened? Unexplaned high idle might be an indicator for this but as mentioned, a dyno could make diagnosing it easier.
 
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