Have you pulled the lower drain plug and looked at the condition of the gear oil ??
I just got done rebuilding my lower unit on a 400 so that part is kind of a sealed unit
so a bad gasket or maybe it got hot and something cracked? but most likely a seal went bad !?
do a pressure test
Thank you all for the response, ill check the oil again as it was changed when the water pump was replaced, thank God i have another drive to use if this one bad. thanks again.