How do you troubleshoot Mercury outboard lower unit?

i have a 97 Mercury 40 hp i have water in my lower unit what could cause that could it be comming from some place near the water pump i saw oil residue in the tube that comes out the side of the cowlingfrom the water pump sprays and is visible to let u know the water pump is working. is it possible that i have the water pump wrong or could some seales be bad and is it something i can fix my self that you jerry