Sherley,
There are two 'typical' ways of lubricating the drive shafts. One is by filling the tube with grease then inserting the drive shaft, then repeat as needed. The other way is by adding an 'oiler' tube to each stuffing tube. Squirt the grease down the 'oiler' tube as needed.
What kind'a lubricant? Oh boy! You'll get about as many answers to that as the number of people who you ask - lol. The 'best' lubricant is one that's water resistant (doesn't disolve), fairly easy to use, that you can find fairly regularly, doesn't cost an arm'n'leg, and is a pretty color (<--- the important part!).
Noisy stuff...
The only thing to really worry about is a noisy drive train, drive shaft, 'U' joints, stuffing tube. All gear boxes are noisy to some extent, and being not too conserned with noise (who ever heard of a quiet 'real' boat?), performance is the 'biggy'. 'Small' amounts of noise doesn't mean much. 'Big' amounts of noise usually means a binding in the drivetrain somewhere.

Quicksilver,
'WD-40', it's self, doesn't pit metal. But, using it improperly certainly can. It's hydroscopic, meaning that it's possible for it to 'trap' water under it. Not huge bubbles of it, but microscopic bubbles. The biggest problem with using 'WD-40' to lubricate a drive shaft is that it isn't 'gooey' enough to stay put, it'll leak out.

- 'Doc
(W5LZ)