Want reverse while in the water...PLEASE HELP

[Ni101]

I have an 1984 Larson OMC Stern drive 4cyl. My problem is that while my boat is in the water it wont go into reverse. We tried testing it out when we got it outside with the hose and it works fine. We have checked the cables and they seem to be fine. Not sure what else to look for. Oh yeah it makes a grinding/clucking noise when you put it in reverse in the water only...Please help

 

[hystat]

borrowing this link from Chief...

http://support.crowleymarine.com/entries/113040-omc-stringer-nominal-neutral-adjustment

 

[Ni101]

Thank you for your help.