You have a 90 mustang? With a MLPS?
That would be a part that is on a later model that has an electronically controlled transmission. AOD-E or 4R70W.
If you have later model, that is the sensor on the drivers side of the transmission. The gear shift cable connects to a lever that in turn turns a rod and that rod goes through the MLPS and into the trans to actuate the valve body.
It tells the PCM what gear the car is in, Park, rev, neutral, OD/3/2/1. Which is quite important to a solonoid shifted trans. It has probably taken a dump and needs to be replaced. Possibly a wire to it or its connector is damaged or off. Or, if you have had the sensor off, it may actually be out of adjustment!
Simple to do, put car in neutral, disconnect cable at trans, remove lever, remove sensor, make sure new sensor is on the neutral markings, I pout a dab of anti-sieze on the rod,and carefully and NOT moving/twisting the inner ring of the sensor, slide sensor onto rod and bolt on, replace lever and cable. Pull battery cable and let codes clear out.
Hope that helps...