Im not sold on water in the LU…
To me it looks like the flange over that covers the prop is broken. Which i would think would be caused by the prop being deflected after striking something.
The current prop has no damage noticable in the pic.
Maybe loaned the boat to a buddy? they put a new prop on it. Not really sure.
It just looks odd that it is the flange that is broken on both sides of the mount that has the bolt. but deffinatley check for water, cant rule it out but the damage looks odd.
After looking at the pic again, It looks like the prop and shaft were pushed outward causing the tears in the flanges…has it been that cold to freeze that hard???