Help!!

For timing you just can't pick any cylinder. Pull the plug on cylinder 1. Get it to top dead center like you are doing. Then put then timing pointer on what degree you want your timing at before top dead center. Then make sure your rotor on the distributor is facing towards the firewall at the 12 o'clock position. This should put you in the ball park to where you want to be. After that go get someone to fine tune the timing for you. I hope this helps you!

sounds like you might be 180 off on the dist.

Putting the distributor back in and setting the timing.
Putting the distributor back in is fairly simple. Pull #1 sparkplug, put your finger in the sparkplug hole,
crank the engine until you feel compression. Then line up the TDC mark on the balancer with the pointer on the engine block.

The distributor starts out with the #1 plug wire lined up at about 12:00 with you facing it. Align the rotor to about 11:00, since it will turn clockwise as it slides into place.

Align the distributor rotor up with the #1 position marked on the cap, slide the distributor down into the block, (you may have to wiggle the rotor slightly to get the gear to engage) and then note where the rotor is pointing.
If it still lines up with #1 position on the cap, install the clamp and bolt. If not, pull it out and turn 1 tooth forwards or backwards and try again. Put the #1 spark plug back in and tighten it down, put the clamp on the distributor, but don't tighten it too much, as you will have to move the distributor to set the timing. Note that there is no such thing as one tooth off on a 5.0 Mustang. If it doesn't align perfectly with #1 position, you can turn the distributor until it does. The only problem is that if you are too far one way or the other, you can't turn the distributor enough to get the 10-14 degree optimum timing range.

10 degrees BTC is towards the drivers side marks.

Simplified diagram of what it looks like. Not all the marks are shown for ease of viewing.

ATC ' ' ' ' ' ' ' ' ' '!' ' ' ' ' ' ' ' ' ' BTC
---------------- > Direction of Rotation as viewed standing in front of the engine.

The ' is 2 degrees.
The ! is TDC
The ' is 10 degrees BTC
Set the timing 5 marks BTC. Or if you prefer, 5 marks towards the driver's side.

Paint the mark on the harmonic balancer with paint -choose 10 degrees BTC or 14 degrees BTC or something else if you have NO2 or other power adder. I try to paint TDC red, 10 degrees BTC white and 14 degrees BTC blue.

At this point hook up all the wires, get out the timing light. Connect timing light up to battery & #1 spark plug. Then start the engine.

Remove the SPOUT connector (do a search if you want a picture of the SPOUT connector) It is the 2 pin rectangular plug on the distributor wiring harness. Only the EFI Mustang engines have a SPOUT. If yours is not EFI, check for a SPOUT: if you don’t find one, skip any instructions regarding the SPOUT
Warning: there are only two places the SPOUT should be when you time the engine. The first place is in your pocket while you are setting the timing and the second is back in the harness when you finish. The little bugger is too easy to lose and too hard to find a replacement.

Start engine, loosen distributor hold down with a 1/2" universal socket. Shine the timing light on the marks and turn the distributor until the mark lines up with the edge of the timing pointer. Tighten down the distributor hold down bolt, Replace the SPOUT connector and you are done.

The HO firing order is 1-3-7-2-6-5-4-8.
Non HO firing order is 1-5-4-2-6-3-7-8

Only use a compression tester with a screw in adapter for the spark plug hole. The other type leaks too much to get an accurate reading. Your local auto parts store may have a compression tester to rent. If you do mechanic work on your own car on a regular basis, it would be a good tool to add to your collection.

With the engine warmed up, remove all spark plugs and prop the throttle wide open, crank the engine until it the gage reading stops increasing. On a cold engine, it will be hard to tell what's good & what's not. Some of the recent posts have numbers ranging from 140-170 PSI. If the compression is low, squirt some oil in the cylinder and do it again – if it comes up, the rings are worn. There should be no more than 10% difference between cylinders. Use a blow down leak test (puts compressed air inside cylinders) on cylinders that have more than 10% difference.

I generally use a big screwdriver handle stuck in the TB between the butterfly and the TB to prop the throttle open. The plastic is soft enough that it won't damage anything and won't get sucked down the intake either.

A battery charger (not the trickle type) is a good thing to have if you haven't driven the car lately or if you have any doubts about the battery's health. Connect it up while you are cranking the engine and it will help keep the starter cranking at a consistent speed from the first cylinder tested to the last cylinder.