2005 Mustang Automatic Gear Shift Indicator work-around
My son's 2005 Mustang had the same problem. The cheap plastic shifter cover also acts as the gear shift indicator. To fix it properly, you will need to replace the entire shifter assembly (min $300 for the part). As my son's car failed safety inspection here in VA because of this, I found a work-around that is similar to an earlier post.
I drilled a small hole in the plastic cover in front of the shifter (~1/4 inch in from the center edge) and attached a black wire with a loop on the end. I then attached that looped wire to the plastic piece with a small black screw (self threading). I did the same to the plastic piece in BACK of the shifter lever. I attached the black wire from the front screw going around the shifter to the back screw. I also wrapped the wire around the shifter a couple of times before making the loop on the back side. This basically attaches the front plastic piece to the back portion. The wire I used was fabricated from black fishing leaders. One end already had a loop while for the other end, I had to make a loop by using small metal tube (small metal sleeve) that I used to crimp the wire to make the back loop. Now the plastic piece in front and back move with the shifter. While not factory, it does not look bad.
I took the car in for re-inspection for the gear shift indicator and it passed with this setup.
Hope this helps.