I drained the gear oil from my 2008 8hp Nissan outboard and it came out milky blue...water in the gearcase? I don't observe any cracks in the housing...are there seals that typically need to be replaced?
Any time you see milky oil there is moisture present. It could be the seals need to be replaced, they have seal kits, or there can be moisture in the oil if it isn't changed anually from condensation.
The LU needs a seal kit. There are seals on the prop and drive shafts, as well as o-rings on the cam rod and the prop shaft housing. You may want to see a dealer for the job.
I see now I neglected to put the o-ring seals around the 3 intake screws (bolts)...seems this could have been the problem rather than the internal seals right?
And if ya drain it just after running, it'll look milky from microscopic bubbles. Put it in a clear container and let it settle. If it clears up its fine if the water settles to the bottom, its leaking.