You have to determine if it is LU gear oil or just residual fuel/oil mix. Remove the LU drain plug and let a little out and check the color. If its a uniform oily color no water has entered the case. If it is a milky/frothy color water has entered and the seals need to be replaced. Oil can still seep out without water entering the case. Remove the prop and leave the motor tilted down with a bucket, cardboard or something clean underneath for a couple days. You should be able to tell if it's gear oil or residual un-burnt fuel/oil mix.
Option 2 is to take it to a shop and have them do a pressure test of the lower unit. Test and simple seal replacement should be around $150-$200.
JSRE Modified Merc Promax