I found this photo online of an original TN27 Carbon Seal Assembly
in the housing. The carbon seal mates up against the rotating end
of the crankshaft. While it may keep water from getting into
the crankcase bottom bushing, it would not keep water out
of the driveshaft / crankshaft splines, as the hole in the center
of the carbon seal is much bigger than the driveshaft.
There is an o-ring on the OD of the carbon seal, but
not on the ID of the carbon seal, like later seals had.
I presume this is why Johnson put out the service bulletin
for upgrading the seal assembly.
Prepare to be boarded!