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My 2 cents if you have to replace anything in the lower end on your 1965 40Hp motor. I run a 1960 40Hp Johnson and had the lower end slipping out of gear due to worn parts. I did my homework and found OMC later modified the clutch dog and prop shaft to use a spring and balls to force the clutch dog into forward or reverse eliminating chatter when shifting and ensure the clutch dog is firmly nestled into the gears. There was a service bulletin for the dealers to do this (I don’t recall the bulletin number). I had this done in 2001 and it was expensive but only a tad more than replacing a worn clutch dog and forward gear. Laing’s outboards (716-693-9070) in New York had the parts:
Used prop shaft (already drilled out) w/balls and springs: $100.00
New clutch dog: $60.00
New Forward Gear: $160.00
New clutch dog cradle: $14.00
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Total: $344.00
I highly recommend if you have to replace the clutch dog or forward gear you include this mod.