Hi Lyle,
I had the same problem when I serviced my water pump ('85 9.8hp). Scared the bejeebies out of me when I started it in a barrel and water started splashing EVERYWHERE... Now I know to check by hand first
But, the solution is simple: drop the lower unit again, rotate the shift shaft appropriately, then re-insert.
The execution of the solution is a bit more challenging. For mine, I noticed some peculiarities that might help you. Before the lower unit is installed, if the lower unit is in forward and I spin the prop, the lower unit clicks down to neutral! I could actually see the shift shaft turn. The lesson I learned is DON'T spin the prop to get shaft splines to line up... turn the flywheel instead (you remembered to remove the spark plugs, right?). The mistake I made repeatedly before learning this lesson is that I would spin the prop to get the shaft seated, which effectively shifted gears, turning neutral into forwards. Once things are back together (but before you bolt things on), turn the flywheel clockwise (looking down) and your prop should spin forwards. Shift to neutral and it should spin free both directions, and if you shift reverse, turning the flywheel should move the prop to reverse.
As a side note, with the lower unit in my vice, I have to turn the shift shaft counter-clockwise (looking down) to manually shift the lower unit into forwards. This might not be the same for you, but it might help you.
Hope that insight helps... Sorry for the rambling. Need more coffee.
