Water in lower unit?

[phatdaddy]

If u are getting water intrusion on a hose, without submerging the prop shaft or oil port & drain, i d say water pump seal or cracked housing.

When u say oil is discolored, is it milky white or just not clear like when u put it in?

As far as $600 for repair, If that is pulling lower unit, pressure checking, repairing as needed, installing new water pump, and reinstalling lower unit, its not too bad.