[Gerry Zagorski]

Yes sounds like water in the oil to me and glad you caught it before it caused any major damage. The typical culprit is the seal on the prop shaft and many times that is caused by fishing line getting caught behind the prop. Like Duff said best way to determine where the leak is, is to have it pressure tested.

When refilling its best to refill by pumping fluid into the bottom oil plug until it comes out the top plug. This method assures all the air in the drive gets displaced with the gear oil.

You also don’t want to let the drive sit around too long with out oil in it since leaving the parts exposed to air could cause the internals to rust. So if you don’t intend to get it pressure tested for a while I’d get some fluid back in it.

Good luck.