Those shards are salt crystals. It's leaking a tiny bit and the heat from the engine room is drying it out and leaving salt behind. I've got the same thing going on. I'm going to pull the collar off, turn it around and get another 20 years out of the other side. Someone pointed out in another thread that the set screws aren't supposed to be re-used. I'll probably re-use them anyway and put a little locktite on them.
Now I'm a "good enough" person. I'm sure there will be several posts forthcoming on why you shouldn't do what I just said. That's fine. That's what I'm going to do and you'll have to make up your own mind.
1983 Fraser 41
La Conner, WA
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Boating for over 25 years, some of them successfully.