As someone who has been in this situation before all be it I owned my 4.0l a little longer than you before mine took a dive. First I would recommend actually finding out what's wrong with the engine, or trans i'd rather spend 500 dollars in diag then begin a 2k plus swap that I might not of needed. You can also figure out if its the guides by pulling off your valve covers on both sides and look at the front and back timing guides check if they're broken or if there is slack in the chain. Did it jump teeth? Do a compression test and see if you bent a valve.
Assuming the engine is toast, 4.0's at least in my area aren't that hard to come by. For reference my car was an 06 4.0l v6 automatic when my guides blew (front and back) I wanted to just get a new 4.0l give it new gaskets, seals, timing, comps, tensioners, oil pump etc, and get my car back. I did it, and it runs today. I also manual swapped it at the same time so it should be cheaper for you. In total price wise I think all in getting the engine, and rebuilding probably cost around 900 dollars, but I also had to buy an engine stand and a cherry picker( 600 together). I have a well lit garage I could work in, do you? These are all variables to take into consideration. Do you have the time for an engine swap or rebuild? My engine rebuild and tranny swap took me over 5 months, 7 to 8 if you count me getting the tools, and me actually figuring out my guides were shit.
I'm not trying to dissuade you. I get it I love the s197 and didn't want to get rid of mine, I went through two relationships and it was always there I didn't want to abandon it. However, be realistic with your skills, toolsets you have available, the time you have, and the dedication needed to confront the task.
Now that I got the rambling, and warnings out of the way. Some advice for if you go the 4.0l route like I did. YOU NEED TO DO THE TIMING JOB BEFORE YOU SHOVE THE ENGINE BACK IN! Get it done and out of the way and you'll have an engine that will last you another 150ks, these 4.0ls are tanks besides the plastic timing guides and plastic thermostat housing. I recommend looking around at junkyards and find the lowest mileage 4.0l, or browse by marketplace on FB that's what I did and got mine for 400 bucks. If you redo the timing(which you should do on either the old or new engine) ford loves fucking loves internal torx bits get a set if you don't have them. BUY THE FUCKING CAMSHAFT LOCKING TOOLS they're 80 bucks and keeps you from crying when the engine is off by a tooth or two when it starts again. Also change the rear main seal, will need a ford special tool for it as well.
-This is a link to the engine timing guide I followed when I rebuilt my engine-
-Buy this book you will thank me later-
https://www.amazon.com/Mustang-2005-2007-Chiltons-Repair-Manual/dp/1563926741
-camshaft locking timing tools-
https://www.ebay.com/itm/264571639884?epid=28039062822&hash=item3d99b2d84c:g:1NsAAOSwFQpjWJFz&amdata=enc:AQAHAAAA8I264yRcU/KtnZ0UBHFMpw8VJCR+o+IZKIOl8zAleyEJYnz26zk99kCmHIn2capRIGyLZ8Mk+CZfiJbkeAM6qEWFyXNAigWVcb0Uz7G/oCvnPlQa1/Ay/w/7FyTrl259xg0QthgChZDkbOsRFcJiJCWtSU1NKlK1VXCnWvnalWaG3J/5CNHJxmKwMGltCx/78/1ZG1cy6tCq9mnN+5M/7U/T1LW7c+jkHyBzlYNKDphmqCoFCle+qRvMTxh1txLVFdlSEOF/XgqgDrQsIqNz2MWjjdCESUCCGeyOkT3Wsh/aouB/Qw+0OHyaevPALAt42A==|tkp:BFBMwt3dg95h
-Timing chain/guides/sprocket kit-
https://www.summitracing.com/parts/clo-9-0398sb/make/ford/model/mustang/year/2006
-video on how to check your timing guides
its the first link I sent its literally within the first 5 minutes[/QUOTE
As someone who has been in this situation before all be it I owned my 4.0l a little longer than you before mine took a dive. First I would recommend actually finding out what's wrong with the engine, or trans i'd rather spend 500 dollars in diag then begin a 2k plus swap that I might not of needed. You can also figure out if its the guides by pulling off your valve covers on both sides and look at the front and back timing guides check if they're broken or if there is slack in the chain. Did it jump teeth? Do a compression test and see if you bent a valve.
Assuming the engine is toast, 4.0's at least in my area aren't that hard to come by. For reference my car was an 06 4.0l v6 automatic when my guides blew (front and back) I wanted to just get a new 4.0l give it new gaskets, seals, timing, comps, tensioners, oil pump etc, and get my car back. I did it, and it runs today. I also manual swapped it at the same time so it should be cheaper for you. In total price wise I think all in getting the engine, and rebuilding probably cost around 900 dollars, but I also had to buy an engine stand and a cherry picker( 600 together). I have a well lit garage I could work in, do you? These are all variables to take into consideration. Do you have the time for an engine swap or rebuild? My engine rebuild and tranny swap took me over 5 months, 7 to 8 if you count me getting the tools, and me actually figuring out my guides were shit.
I'm not trying to dissuade you. I get it I love the s197 and didn't want to get rid of mine, I went through two relationships and it was always there I didn't want to abandon it. However, be realistic with your skills, toolsets you have available, the time you have, and the dedication needed to confront the task.
Now that I got the rambling, and warnings out of the way. Some advice for if you go the 4.0l route like I did. YOU NEED TO DO THE TIMING JOB BEFORE YOU SHOVE THE ENGINE BACK IN! Get it done and out of the way and you'll have an engine that will last you another 150ks, these 4.0ls are tanks besides the plastic timing guides and plastic thermostat housing. I recommend looking around at junkyards and find the lowest mileage 4.0l, or browse by marketplace on FB that's what I did and got mine for 400 bucks. If you redo the timing(which you should do on either the old or new engine) ford loves fucking loves internal torx bits get a set if you don't have them. BUY THE FUCKING CAMSHAFT LOCKING TOOLS they're 80 bucks and keeps you from crying when the engine is off by a tooth or two when it starts again. Also change the rear main seal, will need a ford special tool for it as well.
-This is a link to the engine timing guide I followed when I rebuilt my engine-
-Buy this book you will thank me later-
https://www.amazon.com/Mustang-2005-2007-Chiltons-Repair-Manual/dp/1563926741
-camshaft locking timing tools-
https://www.ebay.com/itm/264571639884?epid=28039062822&hash=item3d99b2d84c:g:1NsAAOSwFQpjWJFz&amdata=enc:AQAHAAAA8I264yRcU/KtnZ0UBHFMpw8VJCR+o+IZKIOl8zAleyEJYnz26zk99kCmHIn2capRIGyLZ8Mk+CZfiJbkeAM6qEWFyXNAigWVcb0Uz7G/oCvnPlQa1/Ay/w/7FyTrl259xg0QthgChZDkbOsRFcJiJCWtSU1NKlK1VXCnWvnalWaG3J/5CNHJxmKwMGltCx/78/1ZG1cy6tCq9mnN+5M/7U/T1LW7c+jkHyBzlYNKDphmqCoFCle+qRvMTxh1txLVFdlSEOF/XgqgDrQsIqNz2MWjjdCESUCCGeyOkT3Wsh/aouB/Qw+0OHyaevPALAt42A==|tkp:BFBMwt3dg95h
-Timing chain/guides/sprocket kit-
https://www.summitracing.com/parts/clo-9-0398sb/make/ford/model/mustang/year/2006
-video on how to check your timing guides
its the first link I sent its literally within the first 5 minutes
I really appreciate how in depth you went on this. So the thing is, I have no experience working on engines. I don’t have any tools to do so or space to do it in so I would be paying someone to do it. And I also appreciate understanding I am attached to the car, I really want it to run again. After your and everyone else’s response I am thinking to just put a new 4.0 in it and down the road, sell it and buy a GT. The problem is it is hard to find an engine with decent mileage for below 1600. Not that it’s my budget but I want to keep it below 2000 for the engine. I’m finding 140k miles for 1600. And the transmissions I’m finding are also around 1300. For reference I live in Oklahoma City. I have a couple people that are willing to do it for me and I trust them because they’ve worked in many cars and rebuilt engines and I’ve heard good things about them. What price and mileage should I be looking for on an engine swap, and how many miles on the transmission should I be looking for? This is of course after I do a diagnosis.