There is nothing wrong with the instructions, they are very clear. Your problem is a lack of understanding of the foxbody engine control computer and/or a lack of understanding of automotive electrical circuits. Wideband Air/Fuel gauges use their own special dedicated wideband sensor. It does not connect to the the foxbody computer at all.
You will need a separate O2 sensor bung welded into the exhaust pipe for the wideband O2 sensor. The closer the wideband sensor it is to the joint where the header bolts to the H pipe, the better the results will be. The Gotcha is that it will only see the air/fuel ratio for one side of the engine. You need two sensors and a selector switch to see both sides of the engine.
Here's a book that will get you started with how the Ford electronic engine control or "computer" works.
Ford Fuel Injection & Electronic Engine Control 1988-1993 by Charles Probst :ISBN 0-8376-0301-3.
It's about $25-$50 from Borders.com see
http://www.amazon.com/ . Select books and then select search. Use the ISBN number (without dashes or spaces) to do a search. Try searching using M-1832-Z1 instead of the ISBN number if you don’t get any positive results. You may only be able to find a used one, since the book is as old as the cars it covers. Or you order it from your Ford dealer as SVO part no. M-1832-Z1.
Use the ISBN number and your local library can get you a loaner copy for free. Only thing is you are limited to keeping the book for two weeks. It is very good, and I found it to be very helpful.
For free automotive electrical training, see
Automotive Training and Resource Site . Once you are there, select online instruction. I have personally reviewed the material and it is very good. If you are new to automotive electrical troubleshooting, I highly recommend you spend a hour or so going through the material. You'll save at least that much time troubleshooting problems.