I just install SE116 upper drive when started engine with cuffs an ran for a few minutes I found water in the gear oil, the drive did not slide easily into the bell housing
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SE116 Water in Gear Oil
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As far as the drive not sliding in easily, did you check the engine alignment? That is usually the culprit.
Water in the oil is a little tougher. You just replaced the lower? Was it only ran on the hose? What caused the upper to fail? Maybe the seals under the water pump are bad and allowing water to enter the drive?
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