Update!
Well boys I ran her last weekend and was able to pull the drive today.... Good news and Bad news.
Good news is, it ain't the bellows. They were nice and dry.
Bad news is, there was water in the shift cable region.
So, she has a new shift cable bushing and I verified the water inlet oring was in place. This must mean the water source is either from the shift cable or the outdrive gasket right?
I did notice the gasket was torn right by the shift valve area and that the stud came out instead of the bolt when removing (one of the six, and did this last time).
And yes, I use a new gasket every time I pull the drive as well as check alignment.
Unlike last time (used an electric impact to reinstall), I made sure to torque the six bolts to 50 ft-lbs per manual. By the way, drive slid all the way in with no issues this time.
So, unless you guys feel there is something I'm missing or anything otherwise, I think I will run this drive for the rest of the season.