i had a similar problem with my Vdrive, which was CAUSED by the impeller going out. the lack of water to cool the exhaust partially melted my muffler, causing it to leak. check your impeller.
i took the muffler out of the boat, and dropped it off with a fiberglass guy who fixed it for $50. he did an excellent job repairing it; the wall thickness is now probably 3x what is was before, and it looks brand new. i put it back in, no problems since.