I used to have one of these engines as an auxilliary. Suspect you’ve engaged the dog clutch on it somehow. It’s easy done. Had the same thing happen to me with Mariner 4hp when changing the impeller.
You shouldn’t have to drain the gear oil but you will probably have to drop the leg again to sort.
The gear linkage rod needs to remain vertical when reinstalling and check it’s in neutral, if it gets knocked when reassembling the leg it can go into gear, then there’s no adjustment at the gear lever on the engine. Pretty sure the water pump housing retains the dog clutch, there’s no separate stainless clamp or bolt to hold in position. You should be able to pull it up or push down to find neutral.
This video may help if you fast forward to the impeller section towards the end.