[Rockter]

Nicky,

For heaven's sake be careful.
That's your final drive shaft seal.
If it is too loose it will leak excessively.
If it is too tight it will overheat and burn the shaft seal or it will twist off the seal.
Adjust it so that it has a very slight weep when it is running. It needs the slight weep to keep it cool.
Adjust it very gently, in very slight stages. Don't go tightening it half a turn or something crazy.
It always leaks a wee bit, so don't attempt to stop the leak completely.

 

[Rockter]

Nicky :
Try nipping it up a tiny bit at a time and watching the leak rate.
It must leak a little bit when spinning, as it needs the water through-put for cooling.
When stopped, allow it to leak a tiny bit too as it encourages the delivering of oxygen to the stern assembly, and that will help the stainless shaft from aggressive corrosion. Stainless does not like de-oxygenated conditions, particularly in seawater environment.
You have to settle for some leakage though. It is just the way they are designed.