I have a friend who has a 18 foot 2001 Bayliner with a 3.0L, the former owner ran the outdrive out of oil when in use. The outdrive is a Alpha 1 Gen 2 with a 2.00 ratio. He has a chance to get a Alpha 1 Gen 2 with a 1.84 ratio from a 1991 Thompson. Will this outdrive work? Can a prop make up for the different ratio or is it just too much gearing to do so?

Yes you can swap the drive and chose another prop to make up the differance in gear ration. Im sure it wont be more then 1 pitch seeing as its not a huge power engine and the gear change is not that drastic.
-Mike

That will be 2-3" of pitch in prop difference. I would just a get new 2.0 ratioi SEI drive for $1500.