Update:
finally got it in the water and worked great up until last day of use up north in Canada. Lost reverse and oil leak (this occurred after I rescued a novice who flipped his canoe in the middle of the lake- good deeds!)
I guessed the circular nut holding bearing carrier had slipped and when I got it off I was right.
The problem I think is that the prior owner/ repair man strip the threads on the housing itself. Also I had bought new nut but was made of a hard plastic compound.
I just ordered new Oem nut and a nut holder tab too.
Question is how to better reinforce or secure the nut to the housing after tightening it and folding down the tabs given the threads are worn and stripped on the housing. Epoxy/jb weld/lock tight?