Rather late response as I have been away. However, as I pointed out in an earlier post the Volvo seal has a fluted rubber bearing behind the lip seals - about 80mm long from memory on a 25mm/1inch size. This is water lubricated in the same way as a cutless and actually very similar to the old Stuart Turner rubber shaft bearings. In this sense they act like a cutless in completely surrounding the shaft over much the same length as a cutless. The difference is that the whole rubber moulding is designed to absorb some movement unlike a cutless which has a rigid outside casing fitted into a rigid tube. It is on this basis that the "seal" provides support. As it is water lubricated there is no wear on either the shaft or the bearing unless, like yours it was connected at an angle to the gearbox coupling and wore oval.
Just for information, the Tides seal and the new Radice development of the Volvo design use a similar "bearing". Just because the name of a product conveys one meaning does not mean that its design does not perform other functions. And of course it keeps it central in the tube if the conditions I stated are there - ie the outer diameter of the tube is concentric with the inner diameter. Of course the shaft can also be moved away from the centre if it is connected to a gearbox coupling that is not lined up correctly with the shaft as seems to have happened in your case with the inevitable result that the seal wore oval.
So the correct procedure is to put the seal/ (bearing) onto the shaft and locate on the tube. Then line up the gearbox coupling using the usual methods (feeler gauges and all) to be exactly square with the prop coupling and it can only be correctly in line. No need for spring balances, special half cones etc.
I have also referred to the Vetus design of sterngear. Note that their inboard fitting has both a bearing and lip seal, both positively water lubricated. Even then they would recommend an additional bearing on a 25mm shaft if the the length between bearings was more than about 1.4m. Have a look at many boats with a P bracket and measure the distance between the gearbox coupling and the P bracket. Then you will understand why, when you remove the support provided by the conventional stuffing box (or a Volvo) the shaft can move enough to hit the tube sides. Effectively you only have one support - the cutless in the P bracket. The whole length of the shaft moves in line with the engine on its mounts.
The issue about which design is more effective as a seal is a different debate, and I am less happy with the idea of a face seal as any movement of either face in relation to the other leads to the possibility of a catastrophic leak, whereas a radial seal, whether lip seal or packing will fail progressively and sends a signal through drips.
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