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Obviously now something for a DIY'r.pressure and vacuum test should reveal your problem very quickly.
you may have a cracked pump housing base. your l/u is most likely filled with water as well. i wouldnt run it untill you fix the problem.
Thanks for the reply.....neighborThe only way I can see gear oil coming out of the water pickup is either a bad downshaft seal or a leak/crack in your lower unit housing. The gear oil has a distinctive odor to it, it smells like gear oil in a rear axle on a vehicle, very sulphur smelling. You are going to have to drop the lower unit and find the source of the leak. Get a shop manual for your motor so you can see the correct way to remove and install it but plan on going to confession after doing it, I usually blurt out a few bad words. By the way I live very close to you in Alpharetta.
There are lots of experts on the Merc inline motors here so I'm sure someone with more experience will chime in. I have never heard of this but my outboard experience is limited to my current Checkmate.
Good luck
Obviously now something for a DIY'r.