I had a 89 coupe a few years ago and had to sell it. I am ready to start looking for another mustang and want to look at getting a 96-04 (I think I got those years right). Which years should I stay away from? which year produce the most HP
Buy whichever looks the best to you. Whichever you decide, it is going to take $$$$ to make them fast. The 96-00 (maybe 01?) had plastic intake manifold coolant runners that are prone to cracking (but there is an updated design to replace it). That aside, these are pretty reliable cars.
If you're absolutely dead-set on a 2V, definitely go with with an 01-04 GT. However, I'd consider a 96-98 Cobra for around the same price (as mentioned above)
01+ looks a bit better. 99+ is faster. I'd buy an 01-04 if I were you. I'd look for a special edition i.e. Roush, Bullitt, Saleen etc. It'd be cool to have something a bit special.