Look for all the obvious things you would for any car like smooth shifting,
oil leaks (don't be afraid to put your knee down and look under the car at the engine, transmission and rear end), maintenance records, check all devices, look for evidence of wrecks (if wrecked ask about who did collsion repair to ensure they are reputable), and be sure to get a
CarFAX (it is money well spent - it's good for a month if you have to pay for it, so you can check all the cars you look at).
If it has modifications, check to see that the work was done well (hopefully by a reputable shop). If it was done by the owner or friends, have it checked by a speed shop familiar with Mustangs. If they are telling the truth about the condition, they shouldn't mind. When I sell mine, I would be willing to go along with them to answer questions, if any came up. If it ahs gears installed, take a ride up to at least 75-80 MPH to see if there is any driveshaft vibration (near rear end). This happens sometimes with gear installs. A little is OK, just make sure it's not too bad.
I have a 99 Cobra as a daily driver and love it. I commute from VA-MD weekly and have 130K trouble free miles so far. I don't race, but I don't baby it either.