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I recommend clear Life Caulk or Life Seal for engine bolts.

There is a proper procedure to be followed when installing an engine to a transom, and I have seen many that are done wrong.

The bottom bolts are the most critical for sealing against water intrusion, and because of that, the lower set of bolts should ALWAYS go in from the outide, with nut on the inside, in the splashwell. This is the only way you can properly seal the hole. The top bolts should go in from the inside, with nut on the engine side.

Proper installation involves putting the bottom bolts all the way throught the engine holes, and then applying the caulking to the NON-THREADED portion of the bolt shank. The top bolts, with washer installed, should have the shanks coated in caulking (but not the threads) before fully inserting into the boat. Then a ring of caulk is applied around the exposed bolt on the ouside.

To install the engine, someone has to hold the bottom bolts in place against the engine and someone has to hold the top bolts in place against the inner boat transom. The engine is then slid on to the upper bolts while the bottom bolts are pushed into the hull. Once the bottom botls are through the transom, a ring of caulking goes around the bolt before the washer and nut are installed. If done correctly, this will give you a totally waterproof installation, keeping your transom dry.

When bottom bolts are installed from the inside, there is no way a good seal can be achieved between the bolt and the wood in the transom.

To avoid galling (nylock nut locked and frozen on threads), fine thread 1/2" bolts should always be used, with brass nylock nuts. All Mercs come with this type of bolt set, and are avaiable in various lenghts from Mercury. If you must use boat store conventional coarse thread bolts with SS nylock nuts, be sure to put grease on the inside of the nut before installing.