From looking at your cap, and knowing the year of the engine block ('85), you definatly need a one piece seal. A 2 piece will never seal correctly.

You'll need to remove the engine or the transmission for replacement. Doesn't matter, whichever seems easiest for you.

I've tried a lot of differant seals over the years. Now I only use the Ford Racing seal; M6701-B302 is correct for your application. It's easiest to install, and I'v never had a failuer. I just put a light coating of oil on the ID and OD, and push it in with my thumb.

If you use an aftermarket seal with a metal casing, it can be a real bear to get installed straight. There's a trick to it. Remove or loosen the rear main cap. Apply a very light smear of your favorite silicone sealant to the OD/ metal rim. Guide the seal into place with your fingers, and THEN put the main cap back on. Perfect seal every time, never a damaged seal. No need to buy a special installation tool, either.

 

If you haven't already, install a windage tray while you are there. Perhaps you will feel better about doing the work.

 

This is an old post, but I just thought I would give you an update. I finally got the transmission out and without a doubt need a one piece seal. I will be doing that in the morning. Thanks again for your help everyone.