I have a 1993 ford taurus 3.8L V6 automatic GL. My transmission has failed and the shop I sent it too gave me three choices: a used transmission for $2000; rebuild my transmission with a 12 month warranty for $2500 or lastly rebuild my transmission with a 36 month warranty for $3500. Which one is the best choice?

If you want to keep the car for 3 more years and you don't see it having any other major problems you could go with the 36 months.
I wouldn't do the used with no rebuild because the most you get for a guarantee with them is one or three months. The most I have ever seen them last is 1 year.
The 12 month rebuild would probably be best

I would take option 2. First off, 2K for a used tranny seems a bit high to me also you have to look at the fact that you don't know how the previous tranny was maintained or abused. $500 difference between used and rebuilt to me would a no brainer. I would spend the extra $500. I don't think that I would spring the extra 1K for the 2 year additional warranty. If done right the rebuilt should last you at least as long as your original did. Just make sure you go to a reputable transmission rebuild shop, one that specializes in tranny's. You may want to also check around, I have seen prices vary from place to place (like AAMCO, H&H) as much as $500-600 for the same rebuild. Also ask around as tranny shops vary from place to place. They have an AAMCO here that is by far the best transmission shop in the area (there is about 10 to choose from) as far as quality parts and mechanics, professionalism, and cost whereas there is an AAMCO up north I wouldn't have bicycle fixed at.