More Questions...
4) the way I am looking at it I will have to remove both boxes which will require removing rivets on the bottom of the boat, is this a concern?
Shouldn't be, but generally, there is a way to remove the transom from the top of the transom area, aka the "caps". If the transom area caps are welded, grind through the welds and get the transom caps off. Once you're done with the repair, you can rivet them back on using a closed end rivet or you can have them welded them back on. Either way will work.
This is somewhat a personal preference, but if it were me, I would remove the transom caps to remove the transom and leave the boxes and the bottom rivets alone. Why? Simple location. Much less likely to cause a leak from a bad transom cap rivet installation than on the bottom of the boat.
5)should I recess the nut side of the bolt in the wood ir just let them stick out?
Let them stick out, use a stainless steel fender washer and make good measurements, so you can get a nut bolt that won't stick out much. Once you're done installing them, cut off any major excess and touch up the tip of the bolt with a file.
6)It looks like I need 1 inch thick wood to replace the transom, should I buy outdoor plywood (which I didnt know existed I thought there was just pressure treated and marine grade) or is there a 1x12 board I could buy since I dont really need a whole sheet of plywood that thick.
Two options to make up thickness:
1. Laminate two pieces of plywood together to make up the thickness. Plywood is no longer sold in English measurements, so you'll have to be satisfied with "close." Probably a sheet of the current "half inch." You will need to use waterproof glue such as Gorilla Glue or Titebond III. Cut the plywood to shape, apply lots of glue between sheets, stick together with a nice weight and wait to dry per glue instructions. Wipe off any excess while still wet.
2. If you have a local supplier of hardwoods, is to have them cut you a piece of oak board the exact thickness you need. It will be more expensive than the plywood, but will be an exact fit and will look very nice. You'll need to coat with epoxy per earlier instructions same as the plywood to prevent rot.
7)Can you elaborate on the application of the sealant, do you put it on the bolt alone or on the bolt, the nut, and the head side. Basically how excessive do you get with the 5200. Put enough on so it seals completely. That usually means it squeezes out a little on each side and forms a tiny donut around the head of the bolt and the nut.