Removing the 3/8 bolt is it the top one or bottom ? What do you mean by having lower unit in gear ? thanks dude
Remove the bottom bolt... that'll leave the top bolt and the brass shift connector secure and in place.
By "in gear", I mean just that. With the lower unit on your work bench, push down on the shift rod, spin the propeller as you do to align the inner shift dog lobes with the gear lobes. You'll feel it click in. Now if you turn the propeller, you'll notice that the driveshaft will also turn.
With the lower unit in gear, this setup makes it easy to align the driveshaft splines with the crankshaft splines. If you don't do this, the only way you can align the splines is to turn the flywheel.... and that is a PITA when you're at the other end of the engine.
I might mention to be careful to get that water tube aligned so that you're sure it's entering the greased water pump grommet. You'd be surprised how many make that goof and end up bending the water tube.