RE: Strut Bushings
Picture doesn't show gap but I allow roughly 1/16" total gap. I usually allow an 1/8" at the stuffing tube so that it's pushing on the strut not the stuffing tube.
I use oillite material to make the bushings which is the self lubricating material that WHH might be using if not it would be similar.
I've changed my spacer to Delron which I think was too soft so I've gone back to a harder PVC plastic. I made a new one just now and I've reamed to .250 and lapped in the shaft to bushing. I have about 5 thou wear on the prop shaft but the bushing had a bore of 45 thou over or 22.5 thou clearance at it's worst spot.
I'm also going to try a dry graphite lube to see how that works out.
As for water cooling this is a surface drive, only 30 % of the prop should be in the water when it's at speed so that means the bushing shouldn't be in the water once you're up and running.
I had been using center saver grease for lathe live centers. It's supposed to resist water and not fling off. It definitely does not fling off! I use it on the flex shaft as well and after a run it's all stuck to the ferrule.
Oh, yes square drive at both ends.