Polaris Express 300 not shifting fully into gears

[Serdrix]

I have a Polaris Express 300 2 stroke. Finally got the engine running smooth with everything tweaked correctly on the carburetor.

I have now moved on to shifting the gears. 
I have had this atv for a long time and high gear was always a pain in the as* to get to go into gear, reverse was okay and low was best. 
You could always feel low go into gear.
A couple of months ago the spark plug cap went bad while I was trying to figure out the issue with shifting into high. At this time I put fresh gear oil in and never drained the old because it literally looked empty. 
Fast forward to a couple of days ago. I finally got everything running but shifting into low you cant really hear grinding gears but it doesn't jerk like it used to when shifting into low and half the time it wouldn't shift fully. 
Reverse would move but completely grinding, and high of course is still the pain in the as*. 
All 3 gears when shifting into clicks like it got a good shift, not a click on the gears or anything, just a normal click that your in gear so I know I am not loose on the shifter rods. 
I checked the gear oil and it was sort of milky, like barely and had bubbles. This means water is in it so i am going to drain the gear oil today. 
What I am wondering is could the bad gear oil be the reason the gears aren't going in fully? I highly doubt it because of the symptoms with some gears grinding and others not going into gear at all like high. 
Just need to know what the causes could possibly be.

Thanks!

[Mech]

The gear engagement system is by the look of it pretty basic. They have chunky looking "dogs" that are able to slide on spines on the shafts, and the gears themselves spin freely on the shafts until you slid the dogs along, which meshes lugs on the dogs with lugs on the gears, locking the gears to the shafts. The dogs are moved by forked shift plates that are moved by the shift lever

For the lugs to engage, one of either the dogs, or the gears, need to be rotating slowly. Since you have been adjusting the throttle and idle speed, I'd check that is all as per the book. If the idle speed is too slow the clutches may not be rotating the gearbox slowly and gently as it probably should to allow the lugs to line up. Another way to get one of either the dogs or the gears to rotate is to rock the bike back and forwards as you try to engage gears.

If the idle speed is too fast, then the lugs on the dogs will start to slide between the lugs on the gears, but then get a load on the meshing faces and bind, hindering any further easy movement.

Lastly, it's perhaps possible(given there's water in there) that there's a bit of rust between the gears, or perhaps just one gear, where it's meant to freewheel on it's shaft, which will cause the gear and the shaft and the splined dog to all be rotating together, which could mean the lugs can't engage between one-other because they are all lined up with lug up against lug. If this is the case, rocking the bike as you try putting it into gear might make the difference, and once the gears are in gear and used the bit of rust might wear off and things may free up and come right.

I'd try getting it into gear by rocking the bike with the motor running, then try getting it into the other gears one after another by rocking, hopeing to free things up. If it works give it a short drive till it's warm and then change the oil.