Belt dressing works wonders but it doesn’t fix the root problem.
Start here:
https://www.youtube.com/watch?v=AEUe6uKxTv8
Pray it’s not a pulley alignment issue. It happens but can be a pain to fix.
I’ve not worked on a merc 350 but I’ve worked on all kinds of auto engines gas and diesel.
Sorry I can’t help on the other issue but just look for leaks. There’s typical a trail to follow. If it’s based off Chevy 350’s they are notorious for rear main seals going bad.