The shift shaft seal I am speaking of is not the one in the outdive, but rather the one in the bell housing.
The "Upper Shift Shaft" vs. "The Lower Shfit Shaft" ... though that one could leak as well but would show up on a pressure test.
Take the leg off: look into the bell housing: look into the exhaust cavity: there is a shaft vertically through this cavity. The top of it has a lever with a bearing that is engaged with your sift cable end.
Now: the exhaust cavity is flooded to seawater. the lower end of this shaft just has a non-water tight bushing, The top goes into the u-joint bellows cavity, which has to be watertight. At the top of the exhaust cavity where this shaft goes into the u-joint cavity there are twin seals. These must be watertight.
The problem is that after they are installed the never ever again get greased. So eventually they fail unless attented to. But no manual tells you to attend to them. No reseal kit includes them. No factory mechanic says "These suckers are crititcal seals."
They fail after a few years. The shaft surface finishes lately are sh**t. Ther is no way to add grease to these seals unless you take out the shift shaft and service it.
Usually you take out the shift shaft to replace the exhaust bellows. The Merc exhaust bellows tool requires this. In the course of that you probably replace or at least service these seals, but it doesn't say to do so anywhere, and if you can get the exhaust bellows back on without taking out the shift shaft, or if you use the exhaust tube instead so you don' t need to use the Merc tool, you might overlook this seal.
Now the top of the shift shaft has a lever on it that is set with a special sort of screw. this screw is made fast with red Loctite, which requires heating it to 500 deg. F to remove without destroying it. BUT heating it to 500 deg cooks the seals and the plastic washer under it.... soooo....
If you need to service these seals and it has never been done you will pooch the seals and the plastic washer and the special screw in the process. New parts in hand are in order before you start. If a mechanic doesn't have the stuff at hand he may not want to go there.
Best bet: the seals will need service or replacement sooner or later. Get the necesary replacement parts and change them out. You can then re-assemble with blue Loctite on the special screw so that in the future you can grease the seals in an annual service by removing the shift shaft without runing the seals or the screw or the washer.
BTW the new shift shaft is likley to come to you with horrible surface condition if the ones I have seen are typical. Chuck it up in a drill press and use a bit of crocus cloth to create a sealing quality suraface on the shaft before you install it.
Peter