TOPIC: 62 Merc 1000 water and exhaust

Ok so I have a 62 merc 1000 100hp. I just purchased the boat and started to get the engine running. I replaced the impeller and gaskets, installed new plugs and added new gas and she fired right up and purres like a kitten. So here is my problem I noticed that there is exhaust and a small amount of water comming out in the front of the gear housing directly forward of the exhaust port and a mist of water in the exhaust when running. I noticed that there was some oil residue in that area when I purchased the boat so I dont think this is new but the engine has not been run in 10 years and was stored correctly. So is this normal or a bad drive to bottom cowl gasket? Any thoughts?

Upon further inspection it looks like it's comming from the upper and lower yoke where the pivots attach to the engine.