UPDATE:
After $30,000 spent on auxiliary power we are back in business with a new 130 saildrive on the existing, 2,200 hour MD22 and it's great. We will pursue it legal matter with the fraudulent boat yard on the "canal" in Seattle but for now everything works, the prop was interchangeable and the new saildrive should outlast us. As an FYI, it powers through the water at 6.5 kts at 2,100 rpms. Perfect. No smoke at all. The engine should be good for a few years too.
BTW, the 130S-C s a vast improvement on the 120SE for lots of reasons but it was $10,000US to get there.