Velvet Drive 71C rebuild trouble

Did you properly attach the shift cable to the fixed bracket on the bellhousing?

This morning before work I checked the cable linkage to the transmission. I actuated the throttle lever and it did not move the gear selector lever. Somewhere the cable has come loose. In my haste of trying it out yesterday evening in the last bit of daylight I did not check if the cable moved the lever. I could freely moving the lever before I attached the cable so I just assumed that everything was fine. My assumption is that the cable must have come loose at the throttle lever when there was slack in it when it was unhooked from the transmission. I will have to look after work today. I HOPE that is the only thing wrong and I do not have to pull the transmission again!

I think you'll probably end up pulling the transmission again, but the good news is that you shouldn't have to get very far into it since after the pump is off, the forward & reverse adapter is next but I figure you know that since you just had it apart and back together.

I've done the same thing and found that I had the reverse clutch piston cocked in the adapter and the reverse clutch was engaging the ring gear so it was stuck in reverse. So in other words something in the reverse section is bound up preventing the ring gear from rotating

Like Pete mentioned, you should be able to rotate the input shaft pretty freely when it's all assembled. The output may want to turn a little while you're doing this but one hand on the output coupling will stop the motion while you're turning the input shaft with the other hand.

Craig,   Unfortunately there is little that can be done with it's still in the boat. Make sure that the selector valve is physically moving from neutral to forward and reverse. I would do that check with the shifter cable disconnected from the selector lever. This can be done in the driveway if you are not in the lake. Make certain that the prop shaft stays lubed with a water source or at least squirt dish soap into the cutlas bearing. This can be done for very short periods of running.   
It sounds more like the reverse clutch is hanging up and not releasing. As you know, that requires removing the trans again.   What year is your trans??   Did you manually shift from F N R ??