3M Marine sealant 101
A long lasting waterproof seal without any unwanted bonding strength when you have to disassemble things later , unlike other sealants.
NO silicons to interfere with future paint work or glass repairs.
I've used it on all my I/O transom assemblies and strongly recommend it for any outboard mounting holes through the transom as well.
I use it for bedding deck and through hull hardware also.

Thanks allot for the suggestion. I'm assuming you're talking 4200 right? Looks like that's a pretty common product that guys like to use.

If I had meant 4200 I would have said 4200 ..

Check out the 3m web page 3m 101 sealant .

At the risk of sounding like a broken record there are many other types of sealants available than just 5200 and 4200

Chill buddy. I missed the 101 part. When I googled it all that came up was 4200 and 5200. I'll take another look. Thanks.

Edit: 101 is no longer available.

Check out the Boatlife range of sealants .They make 2 polysulfide type sealants equivalent to the 3M 101 . One is siliconized and the other isn't .
Incidentally , I think it's a good idea to do an additional seal on the transom plate . I'm sure any mechanics who have been around long enough have stories of many factory gaskets that have failed after time causing many a rotted transom .

I'll probably go with the Life-Calk only because I did put grease on the seal initially. I'll clean it with a little Dawn first.

Looks good man!!! Was gonna suggest some penetrating epoxy on the cut out...but too late!!! Throw the engine in and outdrive on and go boating!!!!

Thanks. Not too late yet though. I'm pulling it back out to put the sealer on. Haven't done it yet. Five minutes worth of work to pull it. I might pick up some paint too. We'll see. The paint is in pretty good condition still.
It'll be a little bit before I put the motor in. I dropped the block off at the machine shop to have a couple things done.

While its out sand some of the bottom paint away. Bottom paint should not contact the transom assembly, and most leave 1 inch space.

I think you'll be pleased in the long run .
One of the nice things about the lifecaulk is that it's very easy to trim away the excess . I often use a wooden chopstick (like the ones that takeout Chinese food come with) and sharpen the tip up a bit .