Did the engine pull over OK before you did the water pump job? If so, something is out of whack…Did you pull the driveshaft out of the gearcase while you did the pump job?
Again, not real clear about what is going on…The way I read you post is that tightening the gearcase retaining bolts stiffens up the powerhead, not the impeller hsg screws…
I would start over again. Like others have said, perhaps the old oring is stuffed up inside the crank, did it come down with the driveshaft when you removed the gearcase? You also indicated that you did not lube the splines, so it would seem that excess grease is not to blame. Perhaps the impeller key is out of place causing the driveshaft to be up too high…
I like the idea about pulling the gearcase, the removing the impeller and hsg, then reinstalling the gearcase and tightening the retaining bolts to see if the powerhead is still stiff….