Blye,
I have a 1 inch shaft for our a Yanmar 2GM20F on our 27 foot boat. I put in the same item in the photo in 2002 or 3. Can't remember the exact time. It took ½ the amount in the tube. I still have the second half for when I need it.
To put it in, I lubed up the shaft with the Teflon grease that comes with it, I then used 1 turn of ¼ inch Teflon packing, then the moldable packing, then another 1 turn of the ¼ packing. I snugged up the nut and once in the water, I ran the boat at speed and tightened up just till the water stopped leaking. Then ran the boat at a comfortable high speed for about one half hour, feeling the packing gland often. It NEVER got anything above warm to the full hand.
Since then I have replaced the shaft using the same packing material.
I have had NO leaking AT ALL! I have had NO problems. I love the stuff. We use our boat in the open ocean and were always worried that if I put in a bellows system, and it had a problem some place I did not have access to a yard to haul out I would be up a creek!
Just my 2 cents....
Greg