Re: Need Help
http://www.crowleymarine.com/mercury_parts/278/23.cfm
Link above should be the parts diagram for your unit
You should see how the spiral lock wire retains the cross-pin in the shift slider
You will need the shift pin and balls installed and press it all against the bench to compree the spring while you drive out the crosspin.
Once the shaft is bare roll it across a flat surface to check for straighness.
Same with the shift shaft.
Any bend should NOT be there, the bend in your shift shaft contributes to the shift cam being (?) out of alignment with the shift pin.
You might consider inking the cam with a felt pen, install the cam, then install the assembled propshaft and carrier minus the carrier outer seal, shift a couple of times so that the shift pin makes a mark on the inked cam. Tear it all apart again and look at the line made in the inked cam. It should be straight and true, if not then replace the vertical shift shaft.
At some point in time, some was reinstalling the LU and jammed the verticle shift shaft, causing it to bend.