I don't have a repair manual for your model, but I will give you my 2 cents worth.

I think that you have two separate problems:
1. Shift indicator out of adjustment.
2. Key cylinder, shifter position, and starter interlock.

On many models of that era, the shift indicator, the one showing in the instruemnt cluster, is a very simple indicator and has no effect on the operation of the vehicle. It merely shows the position of the shifter as a convenience to the driver. It is adjustable and some of these can be easily accidentally taken out of adjustment when one probes behind the instrument panel with a hand, say to change a panel lamp. The indicator I had on a Dodge was nothing more than a spring loaded needle and a piece of sring. The string wrapped around the column shifter rod and its length was adjusted by a slider on the string. When the column shifter rod rotated, it wrapped the string and pulled the needle down - simple. Other makes of vehicles had similar arrangements, the mechanisms differing between column versus floor shifters and to avoid a competitor's patent.

Problem no. 2 is more serious. It is preventing you from unlocking the key tumbler and starting the engine. Two things come to mind: The ignition switch may have slipped and needs a simple adjustment. or the brake interlock is interfering. A mechanic familar with your vehicle is the best bet for this problem.

In that era, some Ford pickups had a brake pedal interlock. You had to to depress the brake pedal a bit before it allowed one to unlock the ignition switch. This mechanism, if present, may need adjustment or freeing up.

Hopefully, someone who is familar with your product will chime in.

I had a similar key issue with my Ford Focus, which are notorious. But it was not the interlock as many said, it was the iginition itself. Mine would not turn at all, and I had to remove the ignition switch and start it that way.

The dealer and locksmiths wanted to replace the whole column for a cool $550-$600. I ended up drilling the ignition out, and installed a new cylinder for $38, my first time ever doing that. Ford has serious issues ith the ignitions.

Here's an update:

After going from one mechanic to another, or being referred to this guy or the other, we finally found one who said the tumbler was worn out. My husband got a new ignition/kit/whatever from Autozone for about $70. He installed it for me but then we found out we needed some kind of certified mechanic because of the anti-theft device. We don't have a Ford dealership here & was worried we'd have to go to the nearest one, about an hour away. We lucked up & the guy who told us it was a worn tumbler (he didn't have time to fix it, that's why my husband did it) also told us the name of a man who once worked as a Ford technician. He still had the little machine but couldn't do it for about a week. He was finally able to do it, during the afternoon in about 95 degree weather, & didn't charge me anything! Just said to return the favor to whomever I could whenever I could. No problem for me since we live by that code anyway.

I do have another question though....When my daughter's friend tried to help (by hotwiring the truck turns out) he pulled out an orange wire. That night I was pretty desperate & wasn't paying close enough attention because I thought he knew what he was doing. When he pulled (or cut) the wire, he said he didn't know what that wire went to. I've been driving the truck for several days now & haven't had any problems except it seems to run alittle hot. My husband says maybe it had something to do with the thermostat or could be something else entirely. No idea where the wire went other than underneath the steering column over to the left side. We can't find any information in the owner's manual but wondered if it would be in one of those books you can get at places like Autozone that are for specific makes? Anyone have ideas on where to start?

Now the old key won't unlock the driver side door but will unlock the passagener side. Does that mean one of us used the new key in the door & wasn't supposed too? I just remember the guy who programmed the new key saying to not use the old key in the ignition because it would cause the anti-theft device to activiate.