Milky gear oil and pressure testing the gearbox

I was changing the gear oil for my Selva Madeira outboard and noticed that the color of old oil was somewhat milky which indicates some presence of water. The color of the oil was not white but gray.

Milky gear oil.

I have noticed that the outer oil seal on the propeller shaft does not look particularly healthy, the lip of seal is pushed outwards, maybe the water is going in there ? I have changed the oil already once during the summer, I did not use new O-rings in the plugs, I know that is not a good practice.

The outer oil seal does not look healthy.

I wanted to do a pressure test for the gearbox, Dangar Marine has posted a nice video how to do it. I used very inexpensive parts to assemble a simple pressure test rig.

Parts list:

- gear oil pump (Biltema)

- fuel system pressure gauge (Biltema)

- one T-connector 

- bike hand pump

- hose clamps

I did a check for the test rig by raising the pressure to 10 PSI and put the connectors under water to see if there were any leaks, everything looked good and the rig was able hold constant pressure for several minutes.

A simple gearbox pressure test rig.

Selva Madeira has three oil drain holes, the yellow connector fits only to one of them.

I don't have Selva service manual so I decided to do similar test that was done in Dangar Marine video for Yamaha 50 gearbox. I increased the pressure to 10 PSI and there was not drop in the pressure after 30 seconds, not even after 60 seconds so I think that the seals are working quite well (at least when the motor is not running).

The only oil drain hole which accepts the yellow connector.

The gearbox was able to hold 10 PSI over 60 seconds.

I'm not sure why there was water mixed in the gear oil if the pressure test gives good results.

I plan to replace at least the oil plug O-rings and consider replacing the lower unit oil seals which is a harder task.