It looks like this ole girl has been moored for a long time without being looked after. Yep for sure replace the riser hose first and don't forget to use some WD40 or penetrant for all the bolts, prevents the broken bolt issue you have now. Replacing the hose will give you the chance to inspect the riser which I would think is in sorry shape also based upon the looks of everything else. Turning the lower shaft by hand will be hard as theres not much leverage and also because you have a new impeller on a dry housing will have some resistance. I found that removing the complete outdrive makes it easier to work on and to reinstall the lower portion. You just have to make a rack for it and another body to help you lift it. Also you need to inspect the bellows, gears, and gimbel bearing as I am sure it has been awhile since that was done. I live near Lake Mead and this is what outdrives look like after they have been in the water for a long time or moored in saltwater. And last if you have not done this before study up on what to do before you tackle it will save you alot of time and broken parts.