Helicoil question

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I have a Mercruiser trim pump where both holes to mount it look very odd. The top of the hole feels like 3/8 and past that down the hole feels like 5/16. I am thinking someone did something odd here with forcing in the wrong size bolt. Its not metric.

So I am considering a helicoil. Are they stainless steel or will they rust?

The hole is not far from the edge of the mounting area so I cannot use too large of a drill to drill out the existing hole.

I am thinking a 5/16 helicoil.
 
Somy other concern is when I use a 21/64 drill, what happens if there is still some (3/8 maybe) thread near the top of the after the drilling is complete?
 
I believe most Helicoil inserts are stainless steel. There are other options such as Inconel, bronze, or titanium but the regular kind you would buy in a store should be SS.

Just remember that Helicoil inserts are advertised by the internal thread (for the bolt they accept). A 5/16"-18 insert is actually about 0.4" in diameter and takes a letter Q drill (0.332") size drill for the tap. Just make sure you have adequate room for that.
 
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