Re: 2007 Mercury 25 EFI Gear Oil From Water Intake
Just to be clear, this is coming from the actual water intakes (on each side of the lower unit) where you'd put flushing muffs on?
Or is it one of the various small holes in the side of the gearcase that are "cavity drains" to prevent pockets of water which could freeze in the winter?
If indeed there is gear oil coming from the intake, the driveshaft oil seals are likely leaking; there's some problem with the pump base (or the sealing of the base); or there's a crack in the gearcase. That's about the only way oil can get back into the intake side of the pump. Most likely is a problem with the oil seals.
Are you sure it's gear oil? It'll smell stinky because of the Extreme-Pressure sulfur additives. If it smells more gassy or oily, it's just unburned hydrocarbons dripping from the exhaust (aka "mung")
Pull the gearcase oil drain plug and check for water contamination. If oil is leaking out of the gearcase, rest assured water will be going in to displace the lost oil.
HTH & let us know what you find out...........ed