It sounds like you did not get the torque convertor seated all the way in the tranny before bolting it tight to the block.
Loosen the bell bolts, remove the t.conver bolts until it can spin freely. Then get it to "click" in while turning the t.conv. The t.conv bolt bosses should lay just inside the flat of the bell. A good check is to bolt the tranny to the block before installing the t.conv bolts and the t.conv should be able to spin with some effort. Like using a screwdriver, but not any real muscle behind it. If the conv will not spin, it is bound and is probably not seated in all the way. take your time and tighten the bell bolts gradually constantly checking the t.conv for bind. Some have damaged the tranny pump by fouling this up.
Sounds like Sick467 post is spot on. Only other advise I would give is go ahead and remove the trans now and check your trans front pump. They are very easily damaged when you do this. And this is a common mistake we see all the time. The torque convertor has to be seated completely in front pump before trans installation. Also couple other things too look at while trans out. Make sure you didn't bend flexplate. Also If this is an engine that did not come in this car make sure that it doesn't have a manual trans pilot bushing in the end of the crankshaft not letting the torque convertor fully seat. I have seen that before also. When going back together the best way to tell if convertor is all the way in lay straight edge across trans bellhousing and measure the depth of the convertor bolt boss. Then measure the distance the flexplate sticks out from the rear of the block mounting surface. The convertor to bellhousing mount distance must exceed that of the flexplate to the block mount distance. Meaning when bolted together there is a slight distance between the torque conv. and the flexplate. If your conv. is the type with the studs made onto it. You will not be able to spin it into position after the engine and trans are bolted together. you have to get studs lined up and into holes in flexplate as you go together with trans and engine. But when block and trans is bolted fully together there will be a little slack between flexplate and conv. . you should be able to rotate the convertor clockwise and counter clockwise just a little bit because holes are slightly bigger than studs. You will see slight movement and clunk clunk noise as you do this. It should move easily. Then install and tighten torque conv nuts. Good luck!!!
A forum community dedicated to Ford Mustang owners and enthusiasts. Come join the discussion about performance, builds, modifications, reviews, engine swaps, classifieds, troubleshooting, maintenance, and more!