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OK, sounds like you have ruled out any freeze cracks in the skeg, good news. I guess that pinion is pretty well stuck to the roller/needle bearing. I guess making up some sort of jig and using a big press to drive the pinion out would be the safest method. Perhaps the pinion bearing will press out with the pinion, which would be fine…I’m guessing you will need to replace all the bearings, but the forward/reverse gears are OK. The pinion may be toast due to pitted bearing surface. There should be a needle bearing underneath the upper seal, try to have a look again, or just remove the seal (which needs to be replaced anyway). Seal groove(s) on the driveshaft spell trouble, the driveshaft will probably have to be replaced….