I have a leak that looks like unburnt fuel and or lower unit oil bubbling out of the exhaust tube where it joins with the swivel bracket/drive shaft tube and shock absorber. There is also water in the lower unit oil. I see from my parts manual that there is an oil retainer ring on top of the lower unit housing. Could this be the culprit?
Unburned fuel coming out exhaust tube/swivel area is common if you spend much time going slow. The water in the lower unit oil could be any of the seals in the lower, but shift shaft seal is likely candidate if not changed recently.
Drain the oil and if you don’t have a pressure tester, get a rubber tipped blow nozzle for your compressor hose. Either turn the available air pressure down to about 7-8lbs, or turn compressor off and bleed off almost all the air. With the drain plug back in place on the lower unit, hold the air nozzle tightly in the vent hole and check the seals and shift shaft Oring for leaks. Soapy water in a spray bottle will show leaks.