Hey guys. Thanks so much for all of your help and suggestions. Friday evening I finished installing a starter shim but got the same results (grinding gear noise). Earlier this week I was reading on the Mallory Marine website to see if there were any clues to my problem. I found this tech bulletin: http://www.mallory-marine.com/pdf/Te...PMStarters.pdf . So after the shim failed to work I pulled the plugs and found water in a couple of cylinders. I'm pretty embarrassed that I didn't think to check that earlier..... Anyway, I turned the motor over by hand with the plugs out and then put them back in and fired the motor up without any problem. I idled it for a couple of minutes and then checked the oil (which looked fine). I ran the boat gently for 20-30 minutes to burn out any moisture that might have been in there and it sounded and felt fine.

So, now I just need to do some reading/research and figure out where the water is coming from. If nothing else, maybe my little hydro-locked saga will help someone else figure out their problem. Thank you guys for all the help!

Arrover - Glad you figured it out. I was going to ask if you checked that, and I assumed you did.

TAKE THE SHIMS OUT if you already haven't done so. If your motor didn't have them initially, you don't need them now.

As for water in the cylinder, it most likely is your riser gaskets. Take the risers off and look down the inside of the center exhaust ports in the manifold. If you see rust, the riser gasket failed. You might be able to just replace the gaskets and be done with it. However, if your manifolds are more than 5 years old, you might need to replace them (especially if they are raw water cooled).

If there is no water in the exhaust, your only other source is likely a blown head gasket. One thing is for certain, if water was in there once, it will definitely be in there again unless the root cause is addressed.

Good Luck!

LJ, Thanks for the recomendations. I haven't taken the risers off yet but I was thinking about ordering some new gaskets today so I could have them this weekend. I normally just order OEM Merc parts but are there better alternatives? I'm not opposed to spending a little more if it will improve my long-term reliablilty.

I THINK that the water was only in the center two cylinders and it was only on one side of the engine. Sounds like it might be the riser gaskets?

The post about the bell housing applies to Inboard engines only where the starter bolts to the bell housing.
In 16 years Mercruiser experience, I have never had to shim a factory Delco PG200 PG250 Or PG260 PMGR starter or an old 10MT starter.
Check the bolts. Check bolts for cracks.
Why did starter fail ? Why could bolts fail ?
These motors have a huge problem with reversion.
Most were not installed properly and suck water.
Many of these motors have finally let go.
We are seeing alot of them lately with water in the cylinders and rotted valve stems etc from an ongoing problem.
I suggest taking original starter apart looking for stripped stationary gear that the planetaries run inside.
Also check the overunning clutch in the starter drive in what some people mistakenly call the Bendix.
I don't recommend an aftermarket starter. It's not as good as a Delco
Clean and scrape the block. Surface it with a file.
You can also file the nose of the starter. Check that for deformaties, holes egged out etc...
I rebuild the Delco starters I install, they work great.

Get a PG 260 starter like the one that came out of it.
This should probably fix your situation.
There is also a difference in pinion teeth count 9 or 11 teeth between starters. More teeth engaged is better. S.A.E. teeth spacing is all the same on Every Mercruiser engine ! Also true the 10-12 degree bevel !
It may sound silly but the bolt length could be different, I sometimes measure the housing with a Vernier caliper when installing a different starter. I at least measure bolt protrusion. You could get a tap and tap socket and chase the block threads too. When tightening the 13MM nut on the solenoid, I use a nut driver. Don't over do it.
Great thing about these starters are that they don't use any current to energize field windings. There are none
Brushes dont burn up, almost all power is converted into torque and motion. Solenoids also almost never go bad because they get the current needed to supply the pull in and hold in windings keeping the contacts inside tight instead of arcing and heating up.

The number 1 enemy of starters is water ! looks like water got in the bellhousing and in the old starter

Water in cylinders is a very serious issue. You've got to determine where and how that water got into the cylinders in the first place. the 496 exhaust manifolds and risers are dry joint type and no water is comming in there unless the manifolds themselves are cracked and leaking. Find that water entry! If you don't and you have it happen again it could be sinonara for your engine. You should also run a compression and leak down test to make sure the water has not bent a rod from locking even with the starter turnover we have seen this and the water may have damaged the ring pack. good Luck.

Best Regards,
Ray @ Raylar

Reversion doesn't care if it's dry joint or not. Motor sucks water like a straw, especially when hot it it creates a vacuum that sucks water up exhaust. Hot motor with heat soak wants to cool off when it stops running, no longer being cooled due to latent heat temp rises. ! The way to fight this is the 1/2" per foot required deadrise in the exhaust . It uses the weight of the water to overcome this phenomenon. Some boat designers fall short, or installations arent perfect and fittings and mufflers arent positioned properly.

Also even if rings free up , pitted ring lands may lead to ring flutter and eventual broken piston rings.
Also like Raylar said, I have seen several motors with bent rods with a piston that would only come up about 3/16" less TDC than the the others .
You cannot compress water. A cylinder that is not firing properly, especially with bad valves also can enhance reversion !