Bruce,
You can buy a water pump kit from Coopers for about $50.00. The "lip" seals that replace the packing are available from either CR (p/n 4933) or OMC (p/n 327031). I dont remember if lip seals are part of the Cooper kit but they should be fitted.
There is no need for machining. Simply disassemble the old pump, clean it up in a bead blaster, and install the new components. The Cooper kit comes with a new shaft, impeller, bearings and bushings, etc.