Allright everyone, I've got something wrong with my 1966 289 V-8 coupe. About a week or two ago I noticed a pretty ugly noise developing. It has become worse since it appeared, and I've noticed a dramatic drop (say, 1/4 to 1/3) in power and acceleration on my engine.

At first, I thought the noise was one of the pulleys or the drive shaft knocking against something as it was perfectly in time with the engine cycle and it sounded like metal whacking against metal.

Having pretty much eliminated that, I came to seek the wisdom of the internets on this forum, which led me to believe it was valve clatter (see here (http://www.mustangforums.com/m_1297863/mpage_1/key_/tm.htm#2223268)). However, I no longer believe this to be the case as the noise is not coming from the valve covers but from the engine body itself (as determined by using the screwdriver-against-the-engine-to-the-ear approach) and I don't think that valve lifters would have this dramatic an effect on power.

Also, on a whim, I checked the oil today and noticed to my horror that I seem to be running bone dry! This is odd inasmuch as I just changed the oil in August and replaced it with 5 litres of good oil. This seems to be abnormally heavy oil consumption, no?

So, my neighbor (who has a lot of experience with classics [though mostly Chevys]) thinks it could be a wrist pin or some other problem linking a piston to the cam shaft which is preventing a piston from firing properly and is just causing clanking.

Any ideas on how to go about narrowing this down or any ideas on what else it might be?

If it sounds like something mettle rattling together (kinda like a bolt in a can being rattled around) then I have the same problem and its primarily heat related, as long as my engine stays at the temp it likes then I have no problems.... have you checked the coolant level? does it happen no matter what or only at certain times? as far as oil consumption you either have a leaky gasket (determined by if you have oil spots on the ground under your car, or wet spots on your engine) or bad piston rings burning the oil in the cylinder (smoke from the exhaust?).... I have probably gone through at least 5qts since August due to bad rings and a bad gasket.

Hope this helps, i'm sure there is someone else that will be able to go in to more detail.

Sorry to hear about your problem.
It sounds as if this procedure will be your best approach.
1.lift hood
2.remove hood
3.remove engine
4.dissassemble and find broken parts
5.reassemble using high quality parts,modify to suit horsepower needs
6.cry over dollars spent
7.rejoice in your proper running Mustang

Not trying to be smart,but it does sound like a major overhaul is in order.
Been there,done that!

Yeah, I concur. You burned the oil because of worn oil rings, then probably ran the engine while it was dry, therefore damaging your rod bearings and other related parts. Time for an overhaul buddy.

Hey, thanks!

Yep, thats pretty much what I expected. Luckily, the rattling has essentially gone away since I replaced the oil, and I'm going to check on power very shortly.

I also found out that I have the glorious and much ballyhooed cork gaskets and seals in my engine, so I'm going to replace those with silicone (as recommended in another thread on this forum) and I'm going to replace the rod bearings and piston rings ASAP.

Any good teardown manual recommendations? Any good engine rebuild kits out there?

If you have the skills, then tear it down and take the block to a machine shop and have them bore it out to 0.030 over. If they can machine your heads too, then have them do that as well. Get a kit and get after it. There are some fairly cheap prices for basic rebuilds out there. Don't spend more than like $1,600 for a stock overhaul even if the shop does all the work.

How to rebuild small block ford engines by tom monroe i have heard is good

Yep...that's the bible.
http://www.amazon.com/gp/reader/0912656891/ref=sib_dp_pt/102-0410357-5659348#reader-link