Classic Mustangs tend to be chronic leakers, but they don't have to be. Leaks come from the absence of good preparation before gaskets and sealer go on as well as proper gasket and sealer use.
You must first begin with a perfect surface. No nicks. No irregularities. No scratches. You cannot seal an imperfect surface no matter how much sealer is applied. You wind up wasting time and sealer. This means you may have to have a machine shop mill the surface or you may have to replace the part entirely if damage is too extensive. Manifolds and cylinder heads require special treatment because you don't want to mill too much and wind up with bad geometry (and gaps) between cylinder head and intake manifold. Another possible option is the use of an epoxy resin like J-B Weld on pitted surfaces as a filler, then mill or block-sand in order to get them perfected.
Gasket material is also important. Some gaskets are poor quality and are going to leak no matter what. In our opinion, the best gasket out there for the money is Fel-Pro from Federal Mogul, available from Summit Racing Equipment. Fel-Pro has a long-standing history of being on the leading edge of gasket technology, which has come a long way, actually to where a leaky engine, transmission, or rear axle is the exception and not the rule.
It is important to remember how parts go together and how they are sealed. Automakers and aftermarket companies spend tremendous amounts of time and money learning what seals and what doesn't. Some applications require gaskets while others call for seals. The use of gasket sealer is necessary only where there are gaps or potential irregularities. Time and again, we see abuses out there, most involving way more sealer than necessary. Keep the use of sealer to a minimum. And if you see it oozing once parts are torqued, you've used too much. A sealer's job is to close gaps, nothing more.
Automatic transmission and engine oil pans leak mostly due to irregularities, including warpage and scoring. You can either dolly surfaces straight or replace the pan. Keep in mind that new pans may also be warped or damaged. Because cork and rubber gaskets are the only gaskets available for C4, C6, and FMX automatic transmission pans, use a very thin film of The Right Stuff on gasket contact surfaces for best results. Transmission builders generally don't like to use sealer. However, The Right Stuff has performed well for us on transmission pans. Just keep it very light.
Removable carrier differentials tend to leak due to improper assembly. There must be perfect contact surfaces. You must also use copper washers, which are soft enough to seal around studs and locknuts. Copper washers also perform well in terms of expansion and contraction. If you're going to use steel flat washers on a differential, use Permatex's Ultra Copper around studs as well as contact surfaces.
What Sealer To Use Where?
There are many schools of thought on the type of gasket sealer to use, and everyone has their favorite. Our advice comes from years of experience-what has worked best for us as well as shops we work with.
Sealer type and use depends on application and location. Permatex is a brand name we've used successfully for years in Mustang Monthly. And no matter what kind of Permatex sealer we've used, we've experienced great success given good preparation and use of the correct sealer for the job.
The Right Stuff will seal just about anything when used properly and sparingly. Elastomeric rubber gasket technology in an aerosol can, The Right Stuff is so good you can return your Mustang to service immediately. You can even use it instead of a gasket if you're in a jam. Temperature ranges for The Right Stuff are from -79F to +450 degrees F. The Right Stuff is available eight different ways, depending upon your needs.

1 Perfect surfaces are a...

1 Perfect surfaces are a key to leak prevention. Traces of old gasket and sealer must be removed from contact surfaces.

2 Although many people use...

2 Although many people use shop towels to wipe down contact surfaces, this is not the best approach according to Marvin McAfee of MCE Engines because it leaves traces of lint that can adversely affect sealing. Marvin suggests the use of a tack rag, which won’t shed lint like a shop towel.

3 Gaskets are designed to...

3 Gaskets are designed to fill in the gap between two parts to keep oil, coolant, or other fluids inside and contaminants outside. In many cases, all you need is a gasket to prevent leaks. Whenever you add sealer in addition to a gasket, you’re being redundant and may be courting trouble because sealer is unnecessary in some applications. Use sealers only where gasket ends meet or gaps exist. If you’re going to use sealer with a gasket, limit its use.
Permatex's Ultra Copper Maximum Temperature RTV 101BR offers the highest temperature rating in the industry: -75F to +700 degrees intermittent. It is three times more oil resistant than any silicone out there. So good, in fact, you can use it on exhaust manifolds. Permatex High-Temp Red RTV 26B silicone sealer has the next highest temperature rating of most silicone sealers, -65F to +650 degrees F intermittent. It delivers outstanding service when used properly. Use High-Temp Red at gasket gaps, such as where oil pan side rail gaskets meet rubber end gaskets. Use it sparingly because, when it oozes out, all you're doing is wasting sealer and it looks unsightly.
When it comes to areas like wet jacket bolt threads and paper gaskets, the old standby--Permatex Form-A-Gasket--tends to be your best friend. You'll recall that wonderful smelling brown stuff from working on your first car. Form-A-Gasket #1 is fast drying and permanent. Form-A-Gasket #2 is slow drying and non-hardening, which makes it possible to disassemble quickly if necessary.
Light-duty gasket applications like valve covers and oil pan side rails can get by with yellow Edelbrock Gasgacinch #9300 in a can. Spread a thin film of this stuff on gasket surfaces for good sealing and adhesion. Gasgacinch holds gaskets firmly in place. It is not a gap sealer, but instead a gasket glue.

4 Engine oil galley plugs...

4 Engine oil galley plugs and cam plugs can be big leakers. Oil galley plugs should get Permatex Form-A-Gasket #2, which is non-hardening and forever pliable. Cam plugs should get The Right Stuff, which works well in the toughest locations. We’ve seen seasoned engine builders use retaining screws and even J-B Weld to keep cam plugs secure and leak free.

5 Rear main seals can be...

5 Rear main seals can be problematic with vintage Ford engines when they aren’t installed properly. Seems every machine shop has its own approach.

6 Ryan Peart from JGM Performance...

6 Ryan Peart from JGM Performance Engineering showed us this trick for installed rear main seals. He uses The Right Stuff between the seal and journal and staggers the seal end gaps so they aren’t aligned with the main cap gaps. Seals must also be generously lubricated with assembly lube because a dry start will damage seals. Once damaged, they will leak.

7 Oil pan end gaskets are...

7 Oil pan end gaskets are difficult because they don’t always fit properly. Most seem to be too long. But actually it’s a matter of gently working the gaskets into place. Do not load these end gaskets with tons of sealer, which will only make the problem worse. A light dressing of sealer between gasket and contact surfaces will do it. Gradually tighten pan bolts in a crisscross fashion.

8 Gaskets need a form of...

8 Gaskets need a form of adhesion so they won’t move. JGM Performance Engineering uses a simple gasket spray on oil pan rail gaskets, allowing it to tack off (get sticky) before positioning the gaskets.

9 The Right Stuff or a good...

9 The Right Stuff or a good Permatex RTV sealer is used where rail gaskets meet rubber end gaskets.

10 Intake manifold end gaskets...

10 Intake manifold end gaskets have fallen from grace over the years because they leak. If you’re going to use manifold end gaskets, use a spray adhesive on both sides along with The Right Stuff in the corners. Use a very light amount of The Right Stuff around cooling passages. When you use too much, you risk blocking passages. If surfaces are pitted, repair them. Do not load them up with excessive amounts of sealer.

11 Marvin McAfee offers us...

11 Marvin McAfee offers us good advice when it comes to freeze plugs. Always use brass freeze plugs, never steel. Marvin uses JB Weld to secure freeze plugs, never sealer. This keeps plugs secure and leak free. Brass freeze plugs will never rot through, especially if you take care of coolant replacement on a regular basis.

12 We’ve run into screw-in...

12 We’ve run into screw-in rocker arm stud coolant leak issues on numerous occasions. JGM Performance Engineering uses a special Teflon sealer along with proper torque settings. Not all types of Teflon sealer perform well in this application. You can also use The Right Stuff or High-Temp silicone on stud threads. Not all cylinder heads have studs that enter the water jacket.

13 Fel-Pro Print-O-Seal head...

13 Fel-Pro Print-O-Seal head gaskets are the best thing going for street engines. Fel-Pro also acknowledges its new Permatorque steel sandwich head gaskets, which require only one torquing and you’re finished. Permatorque head gaskets, as well as other types of steel sandwich head gaskets, call for special head and block milling technique according to Mark Jeffrey at Trans Am Racing. For street applications, Fel-Pro’s Print-O-Seal gaskets work best.

14 Bolt holes and threads...

14 Bolt holes and threads can be sources for leakage. Sparingly use Permatex’s Form-A-Gasket #2 non-hardening on bolt threads to prevent leaks.

15 J-B Weld is a remarkable...

15 J-B Weld is a remarkable two-part epoxy resin, cold-weld compound designed to bond or fill. Use it on pitted iron or aluminum surfaces, then work smooth once it cures. J-B Weld has even been successfully used on cracked blocks and heads by following instructions to the letter. Use J-B Weld to salvage damaged castings. It is waterproof, heat resistant (up to 500-degrees F), chemical tolerant, workable for 30 minutes, and will cure fully in 15-24 hours.