Should the oil in my outdrive look milky or foamy from just running the engine with ear muffs ? Fluid is new.?

No! If it is milky or foamy, then you have water in the oil. Drain the oil, remove the prop and replace the seal. Then refill to the proper level. This should fix the problem, however ther are other ways to get water in the oil. Your waterpump gasket could be leaking or the gasket where your case splits could be bad. More than likely it is the prop seal