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Had it apart again today. Made sure the snap ring was oriented properly and centered. Taper matched with groove. Applied the carbon paper and tightened it down. Even cranked the shaft a little to get as much effect as possible. No use. I didn’t get any impression. So much for that. I also cleaned up the old skeg with the freeze crack and tried it out. It didn’t work any better. So I’m thinking this maybe isn’t a problem with the skeg after all.
As far as the shift rod goes, mine is installed in the orientation depicted in the diagram mumbles posted above. I have wondered if the pinion bearing race (part # 24 in the diagram) were not fully seated then there might exist the possibility that there is excess contact with the pinion and the gears. Pretty sure that is what fleetwin is getting at in his post. I will have a go at this next time I have it apart and see what the clearances look like.
Maybe tomorrow.