Bring the shaft to a prop/shaft shop. If they are good they won't charge for an assessment. It can be difficult to check things out without machines. Now is a good time to save yourself time and money
. Do things right the first time. They can give you options, most likely as follows:
1 new shaft
2 weld and machine old shaft
3 machine old shaft in the bearing area and step down a cutlass bearing size(least favorite option)
BUT, the worn shaft may be only one problem. If the previous owner didn't replace the bearing it is probable he didn't check the engine/shaft coupling alignment.
Many if not most of cutlass bearing, transmission bearing and shaft seal
problems are actually caused by mis alignment. This could even bend the shaft or cause other general chaos.
How to Check Shaft Alignment in a Boat | eHow.com
If you haven't removed the coupling in a long time you might face something similar to what I did