Mercury 9.8 lower unit

I have a late 70's Mercury 9.8 and recently replaced the impeller for the water pump. When I reinstalled the lower unit everything fit nicely but it has no reverse. When i get the lever to go to reverse it will jump too far and then with the lever in reverse the prop will spin like its in neutral. With the lever in neutral or forward the prop spins like its in gear.
Any help would be a appreciated because it is driving me crazy!View attachment 1

i believe that when you adjust the shift linkage, you put the lower end and the shifter both in forward and set the linkage clamp ... atleast that is the routine for my merc 9.9

Thanks, I will definitely give that a shot this weekend. I've been trying to do it with both in neutral. Maybe that's where I'm going wrong.

I had a 75 model 20hp and it said the same thing about having it in gear (can't rem if it was fwd or reverse) when you installed the lower unit.