First thing I would check is that the cable is not slipping. Remember that slipping includes movement of the housing as well as the actual cable slipping at it's attatchment point. Also, be sure to check both ends of the critter. I've had mine loosen up at the binnacle side before.
Does the shift lever feel normal in pressure as well as amount of travel? If you loosen up the cable at the transmission side, you should be able to grab the shift lever on the transmission and it should have a very positive feel of going "clunk" when you shift it into the forward gear.
Another thing to be sure of is that the bracket that holds the cable at the transmission side is solid, and not rotten to the point that it has bent or is bending under the load of shifting it into gear (had to make a new one for my A4 powered E-27 - rusted severly at the aft most part).
If all the above is OK, then you might see if you can put it into gear and hold the flange on the back of the transmission (do not put vice grips on your prop shaft! If you score it, you can cause it to crack later, very bad news e.g. sink your boat if you loose the shaft out the shaft log), and while holding the output, try turning the flywheel on the front of the engine. This is of course easy if you have the hand crank, and hard if you don't....
Other things, but I am assuming you've had a sudden change in performance, would be a prop that is severly fouled, or in the case of a folding prop, one that is not opening for some reason. Do you have vibration as well?
Hope these thoughts get you going in the right direction.
-David
Independence 31
Emerald
and E-27 Avanti (for sale, if anyone is interested, contact me directly)