How can I test my lower unit

[b10doyle]

For starters, I don't know anything about outboards. This past weekend I just picked up a project that I'm going to start working on. I realize most of you are pretty skilled, and you know a lot about boats/outboards, I'm just hoping that I could get some pointers for the basics and to understand more about boats/outboards. Here's my situation: I bought a boat/trailer/motor for $200. The person I bought it from said that they don't know anything about outboards either, but that everything ran really well until he backed up into a rock last summer. A buddy of his looked things over and said "your lower end is shot". That's all the information I have on the incident.
The motor is a 1987 70hp Yamaha ETLH. I do have a shop manual for it, and I was able to look up the year and model by the model number on the ID tag. The lower unit is NOT attached to the motor. It's sitting in the boat. The prop is still on it, and there's a rod sticking straight up out of the unit. There is some scratches and gauges on the housing, but it's not cracked and seems to be in somewhat decent shape (no rust or cracks or obviously damaged parts).
The help that I'm looking for is how to determine that the lower unit is "bad"? Is there a way to cycle through the gears without it being hooked up to the motor? Are there any parts that I should definitely check before turning it in to a mechanic or shopping for a used lower end? Also, what should I be doing on the actual power head to get it ready for the season? It's a 2 stroke, so no oil change needed but I'm assuming spark plugs, carb clean, fuel filter, lube? I work as a mechanic in a manufacturing facility, and I've done work to some small engine stuff like lawn tractors, chainsaws and leaf blowers, so I'm not completely useless lol I just don't know anything about outboards.

Thank you in advance for any help or advice. I appreciate it!

[Sequoiha]

I got my bag of popcorn ready. And go.

[rodbolt17]

if you can walk and chew gum you can fix an outboard.
if you can hack up 1/2 a lung and never lose your smoke you can be a master tech.

in your situation with limited experience and no tooling this is what I would do.
inspect any oil control linkage.
inspect any ign timing control linkage.
at this point adjust NOTHING.
then test compression and spark.
spark tester can be home made,google it or store bought but it must test all 3 at the same time.
compression testers can be purchased or rented use the screw in type not the push and hold type.

if spark and compression are good rebuild/replace the fuel pump,clean/flush all fuel lines and clean the carbs.
take the lower unit to a REAL Yamaha shop.
at the shop look for at a minimum a drive train certification.
no certs then move along.

have the shop disassemble,inspect and reseal the lower.

you may wish to have the lower inspected prior to doing the fuel system.

[b10doyle]

Rod bolt-
Thank you for the advice. Glad to see that some people on this site are willing to help.