Thanks for the help to this point. I have tried several ESC's since then and here is what I have found. All of these ESC's performed the same way whether the motors were in or out of the boat. This helped rule out the motor/drive shaft alignment issues. Also, these ESC's may work in other applications but below is how they worked in my boat and motors with a 12 volt supply battery.

Model Control Devices SC480 - I am still scratching my head why this will not work like I have heard. I sent the controller back to Dan at MCD and he has been more than helpful. He is going to do some work on the ESC and see if he can improve the performance.

Novak Super Duty XR - Controlled the motors very smoothly at both low and high speeds. You can make the motors crawl at very low speeds and hardly any whining from the controller. The only annoying feature is how Novak has the "brake" in this ESC which can not be disabled. You have to stop in neutral before advancing into reverse so that the motors sense they have no load on them and then it will allow you to use reverse. A little tricky for docking applications but it could be done.

Pro Boat Blue ESC - Not sure of the model number but it is anodized blue aluminum. It was only $40 so I thought I would try it out. This would not control very well at low speeds. Not good very attempting to make slow maneuvers. I will not be using this one.

Mtroniks Viper 40 - This ESC had great high and low speed control but the whining from the motors was just about intolerable. I was very disappointed with this one as I had heard great things from a lot of sources. This will not be one of my options.

Anybody have experience with the VanTec or the bigger Robbe line of controllers? I may try one of them next. After all is said and done I will have a few ESC's I will need to sell.
Thanks again.