I have a water leak that did not show up in the Merc drive oil. I change every 25 hrs and have never seen anything except clean oil out of the drive. The drive was hanging up when I spun the props on. When it was torn down we found rust in the upper. Gears OK just bearings. I caught it soon enough. The ring that seals the upper and lower does not appear to be tall enough to contact both housings, Of course Merc denies everything. It appears this is where the leak is...Any thoughts

I'm not real impressed with those o-rings either.Not to mention if you have a spacer you have an additional set.

When I was trouble shooting my Bmax drives I learned a little about o-rings.
I assume you mean #8?

http://www.mercruiserparts.com/Show_...using+Assembly

You might be able to use a 3mm or a .125 one in its place.
Going to need some of your math skills with pi...3.1416.
http://www.mcmaster.com/#o-rings/=9emf6u

The o ring I removed was .068 from the factory. The new one is
.105 the groove is .075...it leaked...imagine that! of course merc said "they have never seen that before"

Looks like somene at the factory install the wrong item then...glad you caught it before it caught you.