Couple of comments regarding your observations....
Seal surface wear: Yes the seals are only rubber, but they will still wear the shafts that they ride on. Remember the input shaft is spinning at maybe 2500 RPM
...that's revs per MINUTE! And this goes on for hours and hours, so it's easy to see that this spring loaded rubber seal will eventually wear a grove in the shaft. That said, the shafts don't look too bad and may still give good service
with new seals installed. Or, you could try to source a "speedy sleeve" to place on the shaft and restore the surface.
Rust flakes in the bilge: From the rusty condition of the input shaft splines I would say that the condition of the damper plate isn't much better, and that's where the rust is coming from.
Forward gear squeal: If you are sure the noise you hear is coming from the transmission, there might be a couple of places to check. You showed us two bearings, one on the input shaft and one on the output shaft, and they look OK. However, the forward bearing on the output shaft is the one that absorbs the propshaft thrust, and we didn't see that one. Check it, and also important is to check the condition of the outer race
for that bearing and be sure it isn't spinning in the gear case. A bearing race
spinning in the case will squeal.
Another bearing that could be suspect is the needle bearing located beneath the reverse gear on the output shaft. In reverse position this bearing is rotating along with the reverse gear, so there is no relative motion between the gear, bearing and output shaft. But in forward position the output shaft and the reverse gear on the output shaft are rotating in opposite direction and the higher the RPM
the greater the relative motion between them and the needle bearing has to accomidate this relative motion......a fruitful source of noise.
Two other quick comments....is that a crack on the output flange seal surface? That could pose future problems. Also I see a little pitting on the gear teeth surfaces....what about the forward gear on the output shaft? Any significant pitting there? Rough pitted teeth could cause noise.