Be aware that when you put the SPOUT back in its place, the computer will advance the timing several degrees. Don't worry about it, this is normal.
Setting the timing:
Paint the mark on the harmonic balancer with paint -choose 10 degrees BTC or 14 degrees BTC or something else if you have NO2 or other power adder. I try to paint TDC red, 10 degrees BTC white and 14 degrees BTC blue.
10 degrees BTC is towards the drivers side marks.
Simplified diagram of what it looks like. Not all the marks are shown for ease of viewing.
ATC ' ' ' ' ' ' ' ' ' '!' ' ' ' ' ' ' ' ' ' BTC
---------------- > Direction of Rotation as viewed standing in front of the engine.
The ' is 2 degrees.
The ! is TDC
The ' is 10 degrees BTC
Set the timing 5 marks BTC. Or if you prefer, 5 marks towards the driver's side to get 10 degrees.
To get 14 degrees, set it 7 marks BTC. Or if you prefer, 7 marks towards the driver's side to get 14 degrees.
The paint marks you make are your friends if you do it correctly. They are much easier to see that the marks machined into the harmonic balancer hub.
At this point hook up all the wires, get out the timing light. Connect timing light up to battery & #1 spark plug. Then start the engine.
Remove the SPOUT connector (do a search if you want a picture of the SPOUT connector) It is the 2 pin rectangular plug on the distributor wiring harness. Only the EFI Mustang engines have a SPOUT. If yours is not EFI, check for a SPOUT: if you don’t find one, skip any instructions regarding the SPOUT
Warning: there are only two places the SPOUT should be when you time the engine. The first place is in your pocket while you are setting the timing and the second is back in the harness when you finish. The little bugger is too easy to lose and too hard to find a replacement.
Start engine, loosen distributor hold down with a 1/2" universal socket. Shine the timing light on the marks and turn the distributor until the mark lines up with the edge of the timing pointer. Tighten down the distributor hold down bolt, Replace the SPOUT connector and you are done.