1958 Johnson 18 HP water pump changing questions

[BDbill]

Hello,
I've taken the lower unit apart from the motor, no problems there. It was missing the crankshaft o-ring, impeller was worn, so I have those parts ordered in the kit. Just some basic questions. The shift rod came out with the lower unit. Is this correct or does it need to be connected to the upper half before putting the LU back on?
Is there a test I should do to check the gears? The crankshaft turns the prop, takes a little slack each way, maybe a 1/2 turn? I removed it while in neutral. Is it ok to pull the shift lever up or down and see if the crankshaft goes into forward or reverse?
This is my first outboard, I checked the coils,points and condensers they looked brand new. The guy I bought it from said he bought it a few years back and intended on getting a boat but never did. It's been painted and looks sharp, I just want to make sure everything that needs to be done before starting is done right. Thank you for your help!

[tx1961whaler]

Everything sounds correct.
The shift rod stays with the lower unit.
The slack is normal.
You can shift with it off of the motor.

[BDbill]

The impeller showed up in the mail today, and I have a new question. I installed the impeller in the housing, it seated fine, I turned the prop while getting the housing over it. It is a real bear to turn now, you have to turn it by the prop. Is this normal after installing a new impeller? I tried it in neutral, forward and Reverse, and it was the same. Thanks for the help.

[tx1961whaler]

That's normal for it to be pretty hard to turn when the impeller is new