Mercury 35/40HP 2 Cylinder Outboards Service Manual PN 90-42794--1, Page 139Get this manual
Forward Gear and Bearing Removal 1If tapered forward gear bearing is rusted or does not roll freely, or if race is damaged, replace bearing and race as an assembly2Remove bearing as shown
4Replace bearing (a) if it is rusted or does not roll freelyUse punch and hammer to remove bearing
Shift Shaft Removal
1Remove shift shaft bushing2Remove shift shaft (b) and shift cam (c) from gear housing