Re: What is the best sealant to use on...
Are you sure that the wood surrounding that screw hole is solid? This might be a 2nd area of wet &/or soft wood similar to what prompted you to start the other thread:
Inside area of engine compartment is rotting...
It may not be related, but since the other area turned into more then you originally thought, it does suggest that there may be more exploration needed below decks & behind the fiberglass skin of the transom & related areas.........
Back in 2003 I left my boat at a mechanics place most of the years, he left it outside and it held water for a long time, very disgusted when I got her back. I was off activated with the Air Force at the time.
Hate to hear that ^^^, particularly while you were on active duty. It might explain what's going on below decks w/ the soft wood.
Weigh carefully what you choose to do (and not do) & how far you explore looking for problems. It will be problematic, I suspect, to fully run down every possible problem of water intrusion, particularly if it sat uncovered, and held water for any length of time. Ultimately you'll want to ensure a safe & sound craft for you & yours to enjoy for a long time.
THANK YOU for your service.