Sounds like your rudder gland packing job wasn't done well the last time.Yes it can be done in the water, but if your SM428 is like mine, 437, you can expect water to come through the rudder fitting as the stern of the boat sits lower in the water than the waterline indicates and thus the rudder gland is actually below the water surface.
The packing lengths should be cut with a very sharp knife at an angle so that the two opposing ends match up.
The individual packings can be pushed / tapped into place using the same piece of PVC pipe you use for the C-drive seals.
You need to tap them down quite hard so that you can refit the nylon nut easily. If you don't the nylon nut can be cross-threaded and then you really have a problem...ask me how I know !
Once the nylon nut is threaded, tighten it slowly, until the gland stops leaking, and then check it regularly and tighten 1/6th of a turn as necessary to keep it dry.