Fresh water may have gotten into the transmission. Check the dipstick on top of the stern drive and look for water mixed in the trans oil. You could also undo the bellows on the drive shaft (top one) and carefully pry it up (don't tear or nick the rubber, or damage the surface it mates to) to see if water leaks out, you won't need to move it much. That bellows covers the universal joints, so you'll probably want to get some new grease in there, there should be grease nipples all over the outside of the drive as well as one on the bellhouse for the bearings inside.
If you can get them to replace the starter I would, but it probably won't have done too much damage. I've cleaned out a few starters that got drowned in salt with hot fresh water and it didn't do them any harm just gotta get it dry afterwards.
Last edited by jtnz; 05-30-2010 at 5:35 PM.