This is the lower unit oil

[davidpm]

from a two stroke small outboard.

Do I have a bad seal?
The color does not look right to me.

[mitiempo]

Looks like an oil/water mix to me. I'd say bad seal.

[pdqaltair]

A quick test is to place some of the oil on glass; the spots that look like bubbles are water.

[LakeSuperiorGeezer]

Looks like water droplets showing white spots through the white bench surface. Also, the color of the oil looks exactly like an oil water mixture. When you order the seal, don’t forget a new water pump impeller.

[Minnewaska]

Check to be sure you have an o-ring or gasket on both the upper and lower plugs. Getting ALL the water out of the gear box is the real trick now. That will likely require several flushes, if you don't just disassemble.

[tommays]

Its only two seals BUT even after changing them a pressure test should be done to ensure no leaks

Due to its age shaft groving in the seal area may be and issue

[LakeSuperiorGeezer]

What year, make, HP, (long shaft?)? Where the split is on the case, where the bolts are, looks like it might be hard to get a good seal where it mates. By the way it almost goes without saying that you really don't know what is needed until you get it apart.

[tommays]

There is and O-Ring between the upper and lower case which is pretty good at sealing

[rugosa]

It's definitely a seal. If it looks like milk you've got water penetration. How extensive, unknown until you crack it open and do post mortem. Hope for the best, be prepared for the worst.