The seal is in the lower plate for the water pump. You drop the lower unit and remove the water pump and impeller. Then depending upon the lower unit, you remove the bolts holding the base plate for the pump and remove it. Drive out or pull out the old seal and set the new one in. While you are at it you may as well replace the shift rod seals and the O-Ring seal for the base plate. CAVEAT: If your lower unit has the bellows type shift rod seal, do not destroy or damage the bellows--they are no longer available. You may also wish to replace the water pump impeller since you already have the pump apart--makes sense.
If you never did it before figure on spending about two hours. The lower unit is a bit heavy so if you are not at least average in strength, have a buddy help you to re-install it.