These are some typical problems with your 45 year old motor.
Lower Unit Leaks
If your lower unit oil turns itself into a milkshake you have a leak. Options: Change the oil after each use or replace the seals.
To find the leak, remove the lower unit as follows.
1. Remove the linkage cover plate and remove the lower screw.
2. Unbolt the 6 bolts holding on the lower unit.
3. Unbolt the larger rear bolt, keep one hand on the lower unit so it doesn't fall off.
4. Pull the unit staight off.
Get an lower unit oil filling hose from the hardware store or marina. These are the ones intended to screw into the lower unit and the a tube of lube. Replace the female end with a connector to your compressor line. With the lower unit upside down, connect this hose from the fill opening on the bottom to your compressor line. Turn on the compressor and let it build 5-10 psi. Use soapy leak spray to check the shafts and seal line for leaks.
The offender in my experience is usually the shift rod bushing and seal. The brass bushing must be removed to replace the o-ring, this is the hard part. You will need to open the lower unit. Thread on iboats.com about removing this bushing.
This is the bushing from the bottom. It needs to be driven out from the other side.
One method involves driving a 5/16" tool rod to push out the bushing. This tool is a piece of 5/16" rod stock turned down to 0.250 on the end and 0.297 on the shaft. Leaving the shaft at 5/16" may be OK since the hole though the aluminum above the bushing can often pass a 5/16" rod.
This is a cross secion of the seal installed.
This is the bushing removed.
A new oil seal o-ring installed into the bushing.
The washer that seats the bushing against the aluminum.
Lower Unit Drain
With the lower unit off you should clean out the exhaust cavity drain. This allows foul water trapped in the lower unit to run out the escape hole. Clean out the scum (in red). It may be well packed in. Use a long, 3/16" drill to bore through the debris. Be careful not to damage the aluminum.
As part of servicing, blow out this hole from the outside to keep it clear.
This requires the lower unit to be removed as well. See above.
Vacuum cut-out Switch
These often fail. Their job is to short out one magneto if you break a shear pin and the RPMs take off, evident by the vacuum line. Their failure mode is shorted. You can remove the wire from the center post and use electrical tape to wrap the wire end. Use and ohm meter to measure resistance from the center to the chassis. It should be open. Keep the vacuum line hooked up or plug it!