I have a 2005 25 hp Merc outboard 2 stroke. It started to leak milky oil with a little water yesterday. I removed the lower unit bottom plug and the oil there looks clear and not milky. I pulled the propeller and the lower unit seal looks okay. In the rear above and behind the propeller shaft is the exhaust port. It looks like that is where the oil is coming from. I had the engine tilted overnight and there was about three or four ounces of oil in the propeller shaft. It smells a little like it was burnt. I am at a lost as to know where the oil is coming from and if this is serious. Thanks for any information you can give me.
