Yes, it has a 'limp home' mode, which is supposed to enable you to get it to a dealer, which is exactly what I suggest you do. It's very difficult to diagnose problems online. I've done it for years, with a great deal of accuracy, but sometimes it's just better to let someone else do it. Your problem could be several different things, but unfortunately, the spot you're in now will require either throwing parts at it trying to get lucky, which I'm against, or using better diagnostic equipment, which you don't have.

It sounds like your problem is being caused by the torque convertor locking up. That is controlled by the ECM, and is normally automatically disconnected when the transmission is in Low, but since that didn't work for you, it's hard to say. The fact that the timing light went away when you disconnected the spout connector suggests it's a problem with the ECM, but I'm not about to suggest you replace it without more data.

I really think your best bet would be to take it to a dealer and have them analyze it for you. Most Ford dealerships will do this for you for around $70.

 

PKRWUD - Pretty much covered it but there is one thing you can try if you haven't already. I encountered a similar problem just the other nite, same year, same engine, with the spout pulled I couldn't get to the front of the motor to check it and two of the times I did make it I had no signal at my timing lite. I turned my distributor as far toward the passenger side as I could get it and tried starting it, I just nudged it a little at a time until it stayed running then I got it timed right. It seems like there is very little margain for error as there used to be back in the day. If you don't get it right without the spout it will not run right with it. By the way, the torque converter could be an issue, I know mine is going bad and it causes all kinds of strange problems.