The tools and materials I used are (links are to pictures):
MIG Welder, 1/2" drill, air grinder, air saw, bench grinder, 9/16" drill bit, 1/2" reamer bit, 1' of 1/2" steel rod, 3"x5" piece of 1/4" steel stock, dial gauge with magnetic base and connecting arm, miscellaneous hand tools and crowbars. The most important part I would say is at least two people to help you!!!!! Also, if you don't have a shop manual for your Mustang yet, go get one. It will save you so much trouble. A Ford manual is recommended but a Chiltons is better than nothing.

The following text The following text was sent to me by a fellow Corraler and written by Preston. It explains it very well so I am just going to copy it and add pictures. My additions are in italics

Its strange how they don't emphasize this procedure when you're buying one, because its very important, but they don't even sell you the alignment kit with the bellhousing! Maybe if you check it out it would actually fit correctly, but I'm under the distinct impression that this needs to be done with all scattershields.

You'll need a dial indicator, and a $10 alignment kit from Lakewood or whoever built the shield. The alignment kit is a couple of 1/4" thick washers. The alignment kit should also have instructions which I will repeat below. The important thing to remember is that this huge heavy scattershield that locates a 600 lb engine and a 150 lb transmission is supposed to have a runout of only .005" !!!!!!
I didn't buy the alignment kit, I made my own out of the 1/4" steel stock and used a drill to get it close to 1/2" and then used the reamer to make it exactly 1/2". See parts picture

Oh yeah, and you will need a welder!!

Remove the clutch, and put the base of the dial indicator onto the center of the flywheel
(I removed two flywheel bolts next to each other to make it mount easier)
(doesn't have to be perfectly centered just close), and install the shield (if you want tshield (if you want to check the alignment first, just install as is, but if you need to align it, you will actually drill out the two holes that go over the engine block dowels by about a 1/16 oversize.

The dowels are actually too short to stick all they way though without balancing them in the holes. I made new ones from 1/2" steel bar and chamfered the ends with a bench grinder. See parts picture. You also need to grind off the paint around the holes to make the weld stick.

When you install the shield just use the 6 main block bolts and maybe one of the lower shield bolts and tighten them but don't crank them all they way. Setup the dial indicator so that it measures the inside diameter of the hole. This is actually one of the more frustrating parts of the procedure for me, trying to get the damn indicator with all of its little bends and friction adjusters to fit in the working area and measure the hole so you can still see the dial. Yes, this is very hard. It took me and my dad about 2 hours! Just keep screwing with it and you'll get it setup eventually.

Set the dial to zero, and slowly turn the engine over for one revolution. Record the highest and lowest dial readings, for example say you get +.060 and -.030 inches. This makes for a total displacement of .090 inches. Since you're going in a circle you've effectively measured the displaceasured the displacement twice, so you're runout is .090/2 = .045 inches. This is a very typical value, and as you can see is WAY larger than .005 inches.

Since you went around one revolution, the dial should be back on zero. Since you measured +.060 and -.030, you're "true zero" is actually at +.015, ie if you move the zero indicator on the dial to +.015 from your original zero and go through a revolution, you will now measure +.045 and -.045 displacement.

So now do that, go through one revolution to ensure that you are measuring equal + and - displacement, and then keep turning the engine until the dial indicator reads the maximum displacement, ie either +.045 or -.045 inches. Now the tough part, you have to "tap" the shield with a mallet in the same direction as the pointer on the dial indicator so that it reads zero. After you do this, if you turn the engine through another revolution the dial indicator should read no displacement, in theory. In reality, getting this down to .005 is pretty tough, I'm sure the lip of the shield probably has at least .002 runout in it anyway. It usually takes a few tap, measure, tap, measure cycles to get this to an acceptable level.
For me, it took ALOT of tap and measure cycles. It was more like, tap, bang, pry, and then measure cycles.

Once the shield is aligned, you slip the alignment washers over the dowels, and then weld them into place. Weld them well, I one. Weld them well, I once had one of these come off when I was pulling the shield and had to do it all over again, underneath the car.

Don't say anything about my ugly-ass welds. Its been a while since I have welded.

So it can be done in the vehicle, but you can see why I thought it was alot easier with the engine out. Nothing to it, right?

This was actually the most frustrating mod I have ever done. Rebuilding the engine was easier. All for no more power, just safety but I think it will be worth it. And it looks COOL!