ok i am pulling the motor out of the tc today and found that it has a hydro clutch, what do i have to do to use the transmission out of the tc in my mustang. is it as simple as using the bellhousing and fork out of mustang or is there more to it then that?
Swap out the bellhousing and clutch fork...however you will also run into issues with the speedometer. Thunderbirds had an electronic speedo sender, and all the turbo transmissions had a different tooth count on the speedo gears (either one more or one less, I can't remember).
If the Mustang already has a 5 speed, leave it alone. There's no real difference between the two regarding strength or any other popular "Turbo Car parts" myths.