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A 78 Mustang IS NOT a front wheel drive... There has never been a front drive Mustang. If I had to throw out a guess to this noise, I'd say its most likely an Inner Ball Socket on the Rack and Pinion...

Hi Mim... I hope you haven't gotten rid of that receiver. I have one, bought it new, and its great! I also had the same problem with mine as you are having and it only takes a .50 cent fuse to fix...