Putting the distributor back in and setting the timing.
Revised 15-Apr-2016 to add fix for TFI hitting the thermostat housing while trying to set the base timing at 14°.
You can forget about anything beyond this point if you don't have access to a timing light. You will never get the timing set right without one.
Note: If you don't have access to a timing light, most of the larger auto parts stores will rent or loan one if you have a credit card or leave a cash deposit.
Putting the distributor back in is fairly simple. Pull #1 sparkplug, put your finger in the sparkplug hole, crank the engine until you feel compression. Then line up the TDC mark on the balancer with the pointer on the engine block.
The distributor starts out with the #1 plug wire lined up at about 12:00 with you facing it. Align the rotor to about 11:00, since it will turn clockwise as it slides into place.
Align the distributor rotor up with the #1 position marked on the cap, slide the distributor down into the block, (you may have to wiggle the rotor slightly to get the gear to engage) and then note where the rotor is pointing.
If it still lines up with #1 position on the cap, install the clamp and bolt. If not, pull it out and turn 1 tooth forwards or backwards and try again. Put the #1 spark plug back in and tighten it down, put the clamp on the distributor, but don't tighten it too much, as you will have to move the distributor to set the timing.
Note that there is no such thing as one tooth off on a 5.0 Mustang if you follow the spark plug wire order on the distributor cap. If it doesn't align perfectly with #1 position, you can turn the distributor until it does. The only problem is that if you are too far one way or the other, you can't turn the distributor enough to get the 10-14 degree optimum timing range. If the TFI prevents the distributor from being turned enough to get 14°, there is a simple fix. Pull the distributor out and turn the rotor 1 tooth counterclockwise
Don't move the wires from the positions shown on the cap on fuel injected engines!!!! The #1 position cast into the cap MUST have the spark plug wire for #1 cylinder in it. Do it differently and the timing for the fuel injectors will be off. The computer uses the PIP sensor to time injector operation by sensing the wide slot in the PIP sensor shutter wheel. If the injector timing of #1 and the firing of #1 do not occur at the right time, the injector timing for all other cylinders will be affected.
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.
Note: setting the timing beyond the 10 degree mark will give you a little more low speed acceleration.
BUT you will need to run 93 octane to avoid pinging and engine damage. Pinging is very hard to hear at full throttle, so it could be present and you would not hear it.
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 than 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.
The HO firing order is 1-3-7-2-6-5-4-8.
Non HO firing order is 1-5-4-2-6-3-7-8
tard. 
