Bummer! No doubt that the SEAL on the output shaft of the gearbox
This is a spring loaded rubber seal that is contained in a small housing at the aft end of the gearbox
Depending on space - if
you can lift
- this SEAL replacement can be done without taking it out of the boat. The gearbox output shaft flange is separated from the red flexable coupling - then the prop shaft and coupling are moved aft -'as far as possible'
I have taken your excellent photo
and added information which will point out exactly where the offending seal is located - once you have got it out - take it to a motor parts
shop and get an inexpensive replacement.