Guys help me out...I just had my engine rebuilt and have only had the boat out 2 times since getting it back. Yesterday I had the boat out and was running 55 mph and all of a sudden I start hearing grinding...I immediatly turn the boat off and check the fluids--all look fine. Ended up getting towed back in and have tried to spin the prop by hand. It fights me but when it does move it sounds like the drive has no fluid!
So my question is this--can a drive be installed incorrectly and cause something like this? Could my drive possibly run out of fluid even though my reservoir is full?

What makes you think the drive has no fluid. Did you CHECK IT. Pull the drain plug on the drive and see if fluid comes out, really check the fluid coming out for any metal shavings. You will know immediately whats going on. If you can't spin the prop freely it sounds like something may have broke inside the drive. At least start there. DRAIN the gear lube.

My guess is you broke some gears in the drive.

Pull the drain plugs and look for metal. Only slight fuzz should be present. Any more than that and you have problems.
Let us know what you find.

The fluid looks good so I have to assume I broke something...Question: how difficult is it to pull a drive and repair this? I want to learn and am wondering if this is a good time to do so (fall is upon us)....Is there is a book I can pickup that will walk me through the steps of pulling a drive and repairing it?

PQ Baby , Mr gadgets is the OSO drive guy he will certainly give the overall best advice on repairs. When you said the fluid looks good, I assume you mean you drained it and there was no metal/Metal flake in the oil at all. you drained all the oil out of the drive. ? As far as pulling the drive very, very easy to pull the drive. Just unbolt the drive rams, front and rear. Unbolt the 6 Nuts holding the drive on. It might take a little prying to get it moving out of the gimball. Slide the drive out and unhook the shift cable out of the clamp/shift linkage. Stand on the right side of the drive when removing and you will see the shift cable as your pulling the drive out. Go slow, take your time. As far as repairing the drive yourself, I would leave that to the experts with experience too many tricks of the trade, tolerances, clearences to know and feel comfortable about. I have pulled my engines 15x, re-rigged my entire engine compartment, pulled drives off and on in my sleep but still don't fell confident putting a drive back together correctly. Mr Gadgets is your man.

Merc has service manuals that cover the rebuild procedure and all the adj/settings. The issue is that it takes a number of specialized tools to disassemble/ reassemble and set one up. You'll have a few $100 just in tools alone.