I was out Sunday when the raw water impeller went on my 96' Malibu Response. I wasn't sure at the time what the problem was but it had disinegrated and filled the filter(which is also the transmission cooler) and wouldn't let water by. The boat would start but when I put power to it the transmission wouldn't engage. What's the deal?

well have you flushed all the lines? Impellers disinegrate when they are not changed for a long time.

Once I got home I flushed the lines and replaced the impeller. I just got the boat a few months ago. What I can't figure out is why the transmission would go. I wouldn't think it would be directly linked the raw water feed other than at the cooler. Could it be because the motor was hot and it went in to safe mode and just wouldn't allow the transmission to go?

check your hoses for cracks or splits and also check tranny fluid level. you may have spliced a line with shrapnel and tranny fluid could of have been drained...?

Most likely safe mode. Try resetting the computer and see what happens.

Anybody know how to reset the computer out fo safe mode or do I have to take it to the dealer, who by the way has been no help what so ever.

well Im not sure on boats, but in the automotive world if you leave your battery unplugged for near 10 mins it will reset itself to factory settings. The only thing I can think of is that when the impeller clogged the lines the tranny overheated and burnt up. Make sure to check the linkage on both ends incase something came loose.