Thanks for getting back to me so soon. Are you saying that normally water should enter the water intake screens on either side of the lower housing and come up through the swivel bearing housing? I just poured about 1 quart of water in the swivel bearing housing and after about 1 1/2 pints were poured, water started coming out of the water intake screen areas on either side. Also, to make sure all the water was out of the swivel bearing area, i turned the unit upside down and some ran out of the swivel bearing area, not very fast since the drive shaft, spacers, etc. are still in there and there is little room for water to enter or leave very quickly. However, a lot of water ran out of the shift cable housing.
As for a manual, I have an OMC service manual that came with the boat and it is very helpful. I am just confused about water coming up through the swivel bearing area but most ran out of the shift cable housing area since I have the shift cable housing cover off.
As for the impeller, I just installed a new impeller. The old housing and top were in very good condition and the impeller looked good too except the arms were shaped permanently from being bent inside the housing. I made certain the new impeller arms were bent in the correct direction. I also applied a thin layer of grease to the walls of the housing and ends of the impeller.
Sorry to be such a pain in the butt with this. It is just that I do not know what to try next.
Again, thanks so very much.