I am in the middle of a rebuild of the stock C4 from a 1965 Mustang with a 200 six cylinder engine. I have a kit from the local NAPA store and a reprint of the original Ford shop manual for the vehicle to work from, as well as a little homework on the web before I decided to do this myself. I have never tackled an auto transmission before, but I am not bad with a wrench. I have followed all the directions in the rebuild manual, looked at all the diagrams and photos, and kept it all clean. I have everything re-built and re-loaded back in the case up to the input shell, forward planet carrier, forward clutch cylinder, and reverse-high clutch drum assembly.
For the life of me, I cannot get the assembly to come back together as the book says it should. The locking lugs between the input shell and the reverse-high clutch drum only mate about half-way, leaving about 1/4" to close the gap. I have checked and rechecked things (for the last 4 hours) and cannot figure where the alignment problem is. I have tried it forward and backwards on the bench, stacked vertically piece by piece in the housing on an engine stand, and checked for gaps with a little pick-probe to see if a thrust washer has fallen out of place. The only way the lugs fully close together is when the forward clutch cylinder is removed. I checked and re-checked that assembly, all the new friction discs and steels went back in and clearances were within specs. I even think that with some prealignment and some coaxing, all the friction discs in the forward and high-reverse clutch are aligning correctly, too.
The Ford shop manual says that if this problem exists, the thrust bearing inside the forward planetary carrier is not fully aligned with the sun gear in the input shell. I checked with a probe over and over and am sure this is not the case.