[MarkR]

I can comment specifically on the V-Drive inboard Seacraft but the straight drive seems to me to be a better setup. I say that because I have struggled with alignment. After having replaced all the engine/transmission mounts, straightened the shaft, trued the prop and replaced the cutlass bearing I was ready for alignment. Aligning the V-Drive is trickey, and the coupling is under the drive. A straight drive looks to me to be a bit easier to deal with.
The issue is vibration. Without proper alignment of the drive components, anoying vibrations can develop.
As far as diesels, it's been done succesfully. I have a 25' Sea-Vee near me that has an awsome inboard diesel setup.
Contemporary thinking seems to lean towards outboards but I have much faith in my inboard and the full transom.
Potters are roughly the '70s.