Re: coroded drive shaft seal
Don't know when they did it (started and stopped) but Merc used carbon steel driveshafts back then. I recall seeing the lower unit from a 6 cyl engine sitting in a vise at a dealer's repair facility and I couldn't believe my eyes when I saw all the rust. I was an OMC guy at the time and the only ones I saw were always SS.
I really doubt you could fix it without removing the rust, welding up the "cancered" area, and machining the shaft back to OEM dimensions.
Would be cheaper and easier to locate a SS off an engine with a blown power head or buy a new one.
HTH
Mark