OK, that scoring on the driveshaft is not going to hurt anything. There is not actual seal on top of the water pump on these engines, so it is normal for some water leakage in that area.
As for the vertical play in the driveshaft, these are two piece driveshafts so that upper driveshaft can be pulled right out of the gearcase, I would not worry about any vertical play/slop. You mention that there is water in the gearcases which does bring up another trouble area, which is the shock absorbing spring in the lower driveshaft. These things get rusted when exposed to water, then they stretch out pushing the lower driveshaft upwards enough so it jams against the lower bushing surface of the upper bushing/seal. So, you will want to inspect this area closely if you pull the gearcase apart.
Both pumps look like they are working just fine….
