My guess is that yes, the prop going below the gunwale is causing the problems. Look at it from the beam, with one tip hidden, (as like in a wheel well) it does not push sideways on the downstroke, while the other end does, while on the upstroke. I am pretty sure the high speed water screw boats that use 'surface drive' props...where only half of the prop is in the water... have to account for the one way prop walk. Can this be adjusted??
Sean