In the driveway, key OFF, disconnect the shift cable, while turning the prop with your foot manually shift it into forward and reverse to see if the gearcase locks into each gear.
If yes then if may be a matter of replacing/adjusting your shift cable.
I just find it strange that when the motor is down, the prop spins free in both directions..in neutral..and when up, it locks one way and ratchets the other...
still in neutral.
and it does not change if I move it into gear.
I will try what you are saying, see if that helps.
Removed the covers and checked the motion of the throttle and shifter cables. The shifter moves perfectly...right as it is supposed to..but I DID notice that the throttle moved a GREAT amount in reverse..and barely moved in forward.
simple .... some one did not line up the shift linkage when they put the lower unit back on .so drop your unit and find neutral gear . then line it up with your shift rod and on your model it twist into and out of gear instead of pull up and push down like the omcs . you may have to twist the shift rod a bit to get the splines to line up and there you go . it sounds like this is your prob since when you tilt it up the clutch moves into gear from gravity and when you let the motor down it pops back out or the other way around regardless mercruisers are bad for this and you have to hold tension on the prop shaft while its in gear to keep it there. if none of this works and you have tried unhooking the shift cable and manualy shifting it then it may time to go into the lower unit
Okay, so I removed the Lower unit...was harder than I thought, but I got it done.
The shift shaft was spinning rather freely, except when it would reach a certain point...I used a socket, the same size as the shaft to turn it, so it would click in and seat.
I did it a couple of times until the prop spun freely.
Then I put it all together again...
when I did, there was a rather larger snap sound as it was coming together...which worries me...
did I bust the drive shaft maybe?
Anyway...all back together, I shifted, and tested the prop...
STILL spins freely in both directions..no change...and now, it seems as though it CLUNKS when I spin it.