Re: 1986 mercury outboard leak
If it smells like regular old gas/oil mix, it's just burnt residual fuel/oil coming from the engine exhaust. Perfectly normal.
If it's a real stinky, sulfur-like odor, it more likely to be gear oil.
Since you didn't find any water in the gear oil, I don't expect you're having a problem.
HTH..........ed
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