Re: 1989 Celebrity 305 Mercruiser Not shifting into gear
You will most likely get more responses in the Mercruiser I/O sub-section of this forum, rather than posting in the propeller section....
I will assume this is an Alpha 1? My #1 guess would be the shift cable. Pretty sure on your boat the cable runs from the carb area, down thru a small bellows underwater (and very frequently torn/ripped), and into the lower unit.
If the shift cable bellows has been torn for some time, corrosion has gotton to the cable housing and seized it up or disconnected it below the waterline.
That would be my best guess without being there to troubleshoot it. Replacing that cable is a pretty big job, access is not fun and a few special tools are needed. You may want to consider doing a complete 4-piece bellow replacement while you're at it and have it all apart...and an impeller...and an engine alignment...and a careful checkover of gimbal bearing and housing...
I mention all of those things because I can ASSURE you that you will not want to do this job twice...
Here's a nice breakdown with a little humor thrown in, of the entire process:
http://www.sterndrives.com/replace_alpha_shiftcable.html
You can get more specific info from a service manual and/or the Mercruiser forum. This is a fairly common problem with the older Alphas...