OK, so you didn’t do the job and have little/no history on the engine. This is a tough situation, I just don’t want you to take something apart needlessly. A bad bearing/shaft surface in the gearcase would probably produce a growling noise, a chipped/broken gear tooth would produce more of a knocking noise. You report that the gearlube is clean, but that may just be because the PO changed it prior to selling the engine to you. Is the prop shaft bent, how do the prop blades look? Does the knock/noise get louder/worse when the engine is put in gear and some throttle is applied?
Again, I want to let you know that these early 35hp engines were mechanical noisey, what you are hearing may be normal for this engine.
I know, I can’t hear the noise so it is impossible for me to judge. So, let’s go slowly if you are convinced the noise is coming from the gearcase. You could remove the gearcase, then put the engine back in a test tank and run it briefly with no gearcase. Make sure the water level is high to muffle as much exhaust noise as possible, see if the noise disappears. If the noise diminishes while running with no gearcase, try removing the prop shaft bearing housing only, you will need big snap ring pliers to remove the retainer plate snap ring, make sure the engine is in neutral. This project will be difficult if this is a salt water motor. Do not pull the prop shaft out! You will dislodge the clutch dog detent balls/spring, near impossible to reinstall without the special tool/installation sleeve. Once the retaining ring is out, carefully remove the retainer plate and the reverse gear/thrust bearing/washer. Once the reverse gear is out, you should be able to inspect the gear teeth pretty well without removing the prop shaft. Reassembly won’t be difficult if no obvious problems are found, provided you don’t pull that prop shaft out.
Let us know what you decide to do, try to post a video of the engine running/knocking for us if you can.
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