The only device that affects base timing is the SPOUT on the TFI harness. With it removed, the computer does not advance the spark.
Otherwise the computer calculates the spark advance based on input from the MAF, TPS, O2, MAP, Map/Baro and EGR sensors.
The best fix for spark knock is to reduce the right foot load and buy 93 octane gas every fill up. With 10:1 compression, you may have problems on cheap gas.
In your case reduce the timing back to 8 degrees instead of the 12-14 degrees recommended for max performance. Here's how to do it...
Paint the mark on the harmonic balancer with paint -choose 10* or 14* or something else if You have NO2 or other power adder.
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.
Connect timing light up to battery & #1 spark plug.
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
To time the ignition: remove the SPOUT and use the timing light to check the timing against the marks on the harmonic balancer. Loosen the distributor hold down bolt and turn the distributor slowly until the light and the desired mark on the harmonic balancer line up. Tighten down the distributor hold down bolt and re-install the SPOUT jumper. When you put the SPOUT back in the computer will advance the spark. The timing may move around some with the SPOUT installed.