Re: 1965 merc 650 wont start, tries to start but backfires
The prior owner may have had the shift cable off while installing the LU. The motor side of the linkage is indexed incorrectly to the LU.
Drop the LU, leave the shift cable disconnected, slide the shift linkage to the center of its slot.
Reinstall the LU in Neutral, you may need to turn the flywheel to align the crankshaft splines.
Now the linkage should be centered, readjust the cable trunion such the cable fits with the shift control in Neutral.
Retest shifting. You may have to fine adjust the trunion to ensure full engagement in Reverse.