The upper bushing assembly is new and has a new seal already in place.
I too was wondering how the pinion gear got damaged, but all other gears and clutch dog look ok, smooth with no sharp edges or missing teeth. The entire outboard was very clean to start with which is what I was looking for, this is my first rebuild. There wasn’t any water, not much oil either in the gear box, just old sludge in the bottom. It appeared that oil leaked out from the lower drain plug on the gear box.
The entire housing was tight when I took it apart initially. Your suggestion about dry assembly is a good one which I will follow. Its a good thing I didn’t follow my urge to do a complete assembly last night.
Please look at the gears and let me know what you think.
Thank you.
