Any water in there is too much.----You need to replace all the seals.----Including the o-ring on the shift rod .---That o-ring is a major leak point if it is 40 years old or more.----No special tools needed for this simple work.
Chance it's finding it's way down to the intake via the AV plate from the vent plug washer?
Something seems wrong here. I'm recalling that the bottom plug is the drain and fill hole. The top plug is a vent. Procedure is to fill from the bottom until oil begins to leak from the vent hole, then tighten the vent screw and (quickly) insert and tighten the bottom/fill screw. On all outboards, oil is always filled through the lower of two holes. The pump mechanism works best, and is slightly less messy.
The simple carburetor and the float and float valve need attention.