The picture of you transom shows whats left of a OMC "Stringer" Drive, not a Cobra drive. The Cobra to Merc conversion kit will not work there. Also, the cutout in the transom is much larger than the cobra or merc cutouts. Some Stringer drives might be available, but they were a more primitive design that used a "knuckle" drive instead of universal joints. The Knuckes wear out quickly (2 years?) unless the outdrive is used trimmed all the way down. And nobody wants do drive a 17ft with the engine trimmed all the way down. So I wouldn't put a stringer drive back on unless the price is super low.
I think you are looking at attaching a large aluminum plate (perhaps near 2' square and 3/8" thick minimum) on the outside of the transom to close off the hole and allow you to add whatever new cutouts and holes you need for your replacement drive. You might also need a plate on the inside (1/4" thick?) for the steering mechanism to mount to, and to act as a sandwich over what might be weak transom area. If you could figure out the dimensions of the plate and cutouts, you could have a local shop with a waterjet machine or milling machine cut them for you. Otherwise you will be spending a lot of time with a drill and jig-saw. You would also want to seal the wood any way you can to prevent water intrusion.
Your 4.3L has the "bat wing" style exhaust manifolds, which have not been available for about 10 years (which means they probably need replacing). The solution is to convert the exhaust to the mercruiser style.
http://www.ebasicmarine.com or
http://www.marinepartsexpress.com sells the whole convertion set of new parts, but your looking at $900+ At least take off your exhaust manifolds and run water through the raw-water inlet to see what condition they are in. Water should flow out of four ports at the exit end. If any of these are rusted shut, the manifold is on it's last legs. fyi, if a manifold rusts through to the exhaust air passage, water goes back to the exhaust valves and into the cylinders...which pretty much causes a rebuild to be necessary.
_________________

"Knot Easy" 2000 Horizon 240 Volvo 5.7GS /SX
tow: 2017 Honda PILOT EXL-AWD
prev. boats:
'87 Chaparral 198CXL 4.3 OMC Cobra
'69 Jetstar 16ft Ski Boat, 115hp Yamaha
'68 Aluminum Jon Boat, 3hp Sears
'64 Water Wings