Never, never disconnect an alternator from the battery with the engine running. The resulting voltage spike can damage the car's electronics including the alternator.
Alternator troubleshooting for 86-95 5.0 Mustangs:
Do all of these tests in sequence. Do not skip around. The results of each test depend on the results of the previous tests for correct interpretation.
Changes in wiring for a 3G alternator are in red.
Engine off, ignition off, battery fully charged.
1.) Look for 12 volts at the alternator output. No 12 volts and the dark green fuse link between the orange/black wires and the battery side of the starter solenoid has open circuited.
3G alternator: Look for 12 volts at the stud on the back of the alternator where the 4 gauge power feed wire is bolted.
No voltage and the fuse for the 4 gauge power feed wire is open or there are some loose connections.
2.) Look for 12 volts on the yellow/white wire that is the power feed to the regulator. No 12 volts, and the fuse link for the yellow/white wire has open circuited.
Engine not running, ignition on, battery fully charged.
1.) Alternator warning light should glow. No glow, bulb has burned out or there is a break in the wiring between the regulator plug and the dash. The warning light supplies an exciter voltage that tells the regulator to turn on. There is a 500 ohm resistor in parallel with the warning light so that if the bulb burns out, the regulator still gets the exciter voltage.
Disconnect the D connector with the 3 wires (yellow/white, white/black and green/red) from the voltage regulator. Measure the voltage on the lt green/red wire. It should be 12 volts. No 12 volts and the wire is broken, or the 500 ohm resistor and dash indicator lamp are bad. If the 12 volts is missing, replace the warning lamp. If after replacing the warning lamp, the test fails again, the wiring between the warning lamp and the alternator is faulty. The warning lamp circuit is part of the instrument panel and contains some connectors that may cause problems.
2.) Reconnect the D plug to the alternator
Probe the green/red wire from the rear of the connector and use the battery negative post as a ground. You should see 2.4-2.6 volts. No voltage and the previous tests passed, you have a failed regulator. This is an actual measurement taken from a car with a working electrical system.
Engine running, Ignition on, battery fully charged:
Probe the green/red wire from the rear of the connector and use the battery negative post as a ground. You should see battery voltage minus .25 to 1.0 volt. If the battery voltage measured across the battery is 15.25 volts, you should see 14.50 volts
Diagram courtesy of Tmoss & Stang&2birds
See the following website for some help from Tmoss (diagram designer) & Stang&2Birds (website host) for help on 88-95 wiring
Mustang FAQ - Wiring & Engine Info Everyone should bookmark this site.
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http://www.veryuseful.com/mustang/tech/engine/images/IgnitionSwitchWiring.gif
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http://www.veryuseful.com/mustang/tech/engine/images/fuel-alt-links-ign-ac.gif
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http://www.veryuseful.com/mustang/tech/engine/images/TFI_5.0_comparison.gif
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http://www.veryuseful.com/mustang/tech/engine/images/MustangFuseBox.gif