We seem to be leaking water in around the transom assembly (large o-ring)...We sealed it with silicon for now to stop the leaking. Until i can take the engine out and make the repair my fear is that we got the transom wet. Any good way to ensure its dry? Should I worry?

depends on how long you think it was leaking,

i think we caught it early. whenever we splash we check the engine compartment...(oil level, gear oil level, water intrusion, belt wear, etc)

if you caught it early I wouldnt worry, however your temp repair is questionable, do you know for a fact its sealed off? sounds like a trailer queen and not a boat that sits in the water so if thats the case I wouldn't worry, but make sure that your repair is sound or get it taken care of before other issues arrive,