Mercury 35/40HP 2 Cylinder Outboards Service Manual PN 90-42794--1, Page 152Get this manual
9Install locking nuts and washers (a) and centrifugal slinger (b) 4Install rubber seal and seat assembly to drive shaft5Shift gear housing to forward positionpropeller shaft will not rotate counterclockwise6Install shift shaft guide (if equipped)
Gear Housing Installation
AWARNING
When installing gear housing, remove (and isolate) spark plug leads from spark plugs to avoid accidental outboard starting1Remove and isolate spark plug leads2Tilt outboard to full up position and engage tilt lock lever3Install plate (a) "ribbed side down" and seal (b) "tapered side up" into gear housingLubricate inside of seal with Quicksilver 2-4-C Marine Lubricant