^^^EVERY WORD^^^ Michael said!!! This just happened to us. 22-year-old Alpha One Gen Two. It's hard to evaluate a Transom (by that I mean that fiberglass/wooden part of the boat) or a Transom Assembly (the black metal MerCruiser I/O part) in most I/O boats with the engine in place. When we pulled the engine, that rust and corrosion were evident, AND the assembly wouldn't steer, with manual effort. It had been steering OK underway with the power assist.
Boat Transom: If the seal has failed, bolts corroded through, wood rot, that MerC assembly has to come out and the transom repaired to whatever extent water has damaged it. It has to hold water back, AND it bears the weight and thrust of the I/O. In our case, the Sea Ray transom was OK. The Merc component was shot.
MerC "Transom:" The Seal fails, the Water gets in, it Corrodes... The corrosion builds up and minimizes the amount of leakage in many cases, but the "Transom" (a lot of mechanics leave off the "Assembly" part of its name) is shot. MerC sells new ones for a little over $Two Boating. A used one could be a good deal if very new or off of a freshwater boat. From MerC, it's a very complete assembly. Trim rams, hoses, a shift cable, power steering hoses, bellows, gimbal bearing and more.
Anything about ...transom... is bad news.
A friend just parted the MerC I/O out of a small boat, not sure what the origin was or if he still has the "Transom." Alpha and Bravo are different.