I think this is the plug in the pivot housing, see part # 70
http://www.dougrussell.com/partscatalog ... ,2872,2623My OMC Cobra has similar plugs, one on the port side and two on the starboard side, and when you remove them water (not a lot but some) does come out...so I'd first try spraying some penetrating oil around the plug to try to get it in the threads and let is sit for a few days and try again. I'm not sure if not draining that area will result in a crack but I do know water comes out of the plugs on mine...
http://www.dougrussell.com/partscatalog ... 09,507,508Note how similar the transom mounts are from OMC to Volvo, they basically used the OMC transom mount gimble system and then added cone clutch gears to the drive....
And as an aside, there was someone on here with an SX that got a crack in the drive because the slot on the starboard side where the drive meets the pivot housing got clogged, that slot (about the thickness of a medium screwdriver blade) has to drain or the water can expand and cause a crack...