It looks like the carbon ring isn't pushed all the way in the boot. Push it in and reclamp and test. If that doesn't work, my suggestion is pull the jet pump off. Remove the compression clip/or rubber compression bushing(if original it will be a rubber bushing), pull the drive shaft out, make sure to not loose the bumper stops on each end of the drive shaft. Replace the rubber boot, the carbon ring and metal hat with new ones. I've used the amazon/ebay kits and they are junk. Go to dealer or osd marine online and buy a carbon ring and seal kit. Trust me if its leaking just replace it. It sounds hard but it's not. There are youtube videos galore on it.