"William:
Was the oil milky
"William:
Was the oil milky gray when you drained it? When filling the oil from the bottom drain hole, does any oil come out of the upper vent hole at the same time it leaks? If none comes out of the vent after pumping 36 ozs., then I would suspect the lower oil shaft seal. If oil does come out of the vent hole, I suspect it is the upper O-ring on the lower unit shaft--some newer models do not use this O-ring, just a seal in the bottom of the upper unit of the O/D.
The lower oil seal for the vertical shaft of the lower unit is part of the lower half of the water impeller housing on my 87 Alpha 1. This seal leaking could allow oil to leak where you say it does. I just changed my entire housing w/impeller due to age--lower half was distorted from overheating; seal was worn pretty good.
There is also a dime sized O-ring on the starboard side of the top of the lower unit. Not sure if this one would cause a leak you described.
Guy"
