My 2004 MAG 350 MPI is at position C, right above where the oil filter would generally mount. Unplug and jump the wires to see if you get power to the fuel pump.
I bet the soap may contain silicate (for alkali and water hardness control), when they dry without being rinsed entirely they will leave a chalky residue, (which can be tough to remove).
I agree the outside bearing is dry, failure dry, the way things are smeared around near the nut the outside bearing was gone for a while causing the death wobble taking everything else out.
Last Fall I had the same scenario when I had my trailer painted. I just rented a short-term slip at marina close by and wet slipped it until the trailer was done a week later.
Yes, capable machine shop can easily fix scoring ask if they have the capability to metalize. They "spray" molten metal over the damaged area larger than the needed diameter and then turn it down to spec on a lathe. Much quicker than having to wait 5 weeks during prime boating season.
The 2 smaller wires with the yellow insulators go to the bilge pump and look correct. I'd be concerned about the other red wire going to the negative terminal. I don't have that on my 2004 and usually anything with a red wire wouldn't go to negative...but without knowing the history of your...
I know the mounts are different, but if I remember right its a matter of cutting for the new mount and not "filling in the old" and then cutting for the new mount. It's been 40 years since I've even thought about it...sorry I can't be more help.
Welcome fellow 220 Select owner. These are great family boats we love ours. Follow the maintenance advise above if nothing else to give you a starting point so you know where you are.
Enjoy
I was afraid of that.... at 53 years old (stern drive still in it's infancy and not many around even back then) and several generations removed from current, parts are going to be near impossible to find unless you can find a donor unit. Practically....if you love the boat, you'll be money...
Start with finding the serial number. It should be on a metal tag riveted above the starter if it is still the original engine. I don't remember the 225 being that far back but the serial number will confirm what you have.