94 Mustang Automatic Transmission Backup Lamps Don't Work

You can check mlps alignment, but if someone hasn't been in there messing with things I'd expect the sensor is going bad. The early ones were especially notorious for water intrusion problems. Can't see your picture though.

I'd give adjusting it a shot before returning the sensor. On different cars the cables aren't all the same, so I'm not sure what you're dealing with there. The second detent on the lever is reverse, and the lights should come on easily every time. The sensor is meant to be aligned in the third detent position (neutral), with the lines on the sensor matching the lines in the inner ring where it sits on the lever. The cable adjustment would be more likely if the gears didn't align with the gear indicator on the console.