1977 brakelight “problem”

The light can be triggered by the hand-brake, but with your symptoms it's most likely the 'pressure sensing switch.' The light comes on when the switch inside the distribution block tells it one side of the brake system has more pressure than the other, which would indicate a leak. Or of that's verifiably not the case, the switch could have gone 'off balance' due to an earlier leak (or even during bleeding) or become stuck due to some corrosion.

The distribution block is typically on the inner-fender not far from the master cylinder. It's basically just a slider inside the distribution block that makes contact with the switch when it moves too far to one side or the other based on the pressure differential. You might be able to re-center the slider with some creative bleeding. Pick a random wheel, have a helper press the brake, crack open a bleeder, close bleeder. If that doesn't help, retry the procedure on a wheel on the other side of the circuit. I've heard you can re-set the valve by removing the switch itself and manually moving the slider with a pick. With the loss of the mustangii forums I can't find a link to some good article that I'm certain once existed about this procedure. Perhaps one of the other good folks here will remember.

The last possibility could be a short in the wiring to the switch on the distribution block. This would be unlikely to come & go with braking however, but always a good idea to check connections and the condition of the harness.

Edit: another possibility is that you have an internal failure in the master cylinder, and the switch is giving you an accurate reading. you are the one to best know the condition of your m/c. if it brakes very well, and both front & rear brakes are working, then it's probably not the case.

Hey,
i've read about this problem with the 67+ models. The distribution block with its warning light stayed the same over the years. So here is a little bit more info about that: 67-dash-brake-light-won-t-turn-off
Some one suggest to test if the light goes off (when its on) when you disconnect the harness at the distribution block.