1989 Ford F350

Sounds like there is a fault on the MLP manual lever position sensor. Will look into the way of testing this curcuit if you require. Or a ford dealer or good diagnostic centre could help?

Whilst researching your test procedure I found this information. Perhaps this could be the cause of your problem?

GEARSHIFT LINKAGE
NOTE:Adjustment of manual shift linkage/cable is critical. Ensure "D" or (Overdrive) detent in transmission corresponds exactly with stop in console.

All Except Aerostar, Bronco II & Ranger
Move selector lever rearward against stop in "D" position. On models with column mounted shift levers, hold lever against stop by hanging an 8 lb. (3.6 kg) weight from selector lever.
Loosen manual lever-to-control cable (or rod) retaining nut. Move transmission manual lever to drive position (second detent from rear). Hold selector against rear of "D" position and tighten retaining nut. Check for normal operation in all selected positions.

Aerostar
From inside vehicle, place gearshift lever in "Overdrive" position. From under vehicle, loosen adjustment screw on shift cable and remove end fitting from manual lever ball stud.
Position manual lever in "Overdrive" position by moving lever all the way rearward, then moving it 3 detents forward. Connect cable end fitting to manual lever.
NOTE:Excessive arm pressure can move shifter to "D" position. Apply pressure only until resistance of detent nib is felt.

Tighten adjusting screw to 45-60 INCH lbs. (5-7 N.M). After adjustment of shift linkage, check for "P" position engagement. Control lever must move to right when engaged in "P" detent.
Check control lever corresponds in all detent positions with engine running to ensure correct detent/transmission action.

Bronco II & Ranger
With engine off and parking brake applied, place shift lever in "D". Loosen trunnion bolt. Move shift lever at transmission all the way to the rear, then forward 4 steps. This places lever in "D" position.
Apply light forward pressure on shift control lever (at transmission) and tighten trunnion bolt to 18-31 ft. Lbs. (13-23 N.M). Move lever through all positions making sure transmission is at full detent in each position.
NEUTRAL SAFETY SWITCH
NOTE:AOD and A4LD switches are not adjustable. If necessary, use Neutral Start Switch Socket (T74P-77247-A) to replace switch. If any other socket is used, damage to switch may occur.

With transmission shift linkage properly adjusted, loosen the 2 switch attaching bolts. Place transmission manual lever in neutral position. Rotate switch and insert a gauge pin (No. 43 drill bit) into gauge pin hole of switch.
Gauge pin must be inserted completely through all 3 holes of switch. Tighten switch attaching bolts and remove gauge pin. Check operation of switch. Engine should start in "N" or "P" positions, only.

You need a break out box to test this circiut. It's a bit complex. Maybe easier to just get the vehicles computer read?

1) Code 634, 654 & 67: Check Resistance Through MLP Sensor

Code 67/634 indicates that total resistance in the MLP sensor is out of Self-Test range when the selector lever is in "P" (correct range is 3770-4607 ohms). Code 654 indicates that selector lever was not in Park position during self test. Possible causes for this fault are: faulty MLP sensor, open or shorted harness, faulty ECA. Turn key off and wait 10 seconds. Disconnect ECA 60-pin connector and inspect for corroded or damaged pins. Service or repair as necessary. Install breakout box, leaving ECA disconnected. With KOEO, measure resistance between test pins No. 30 and 46 at the breakout box while moving the selector from "P" to "L" and back to "P". Record specifications and compare to specification table. See MLP RESISTANCE SPECIFICATIONS table. If resistance is within specification, go to step 3). If resistance is not as specified, go to next step.
MLP RESISTANCE SPECIFICATIONS

Gear Position Min. Ohms Max. Ohms
"P" 3770 4607
"R" 1304 1593
"N" 660 807
"D" 361 442
"2" 190 232
"1" 78 95

2) Checking Continuity Of MLP Harness

Ensure key is off and MLP sensor is disconnected from harness. Use a mirror to inspect ends of transmission harness connector at MLP sensor for damage or corrosion. Repair as necessary. Install breakout box, leaving ECA disconnected. Measure resistance between test pin No. 30 at the breakout box and corresponding pin at the MLP sensor vehicle harness connector. Measure resistance between test pin No. 46 at the breakout box and corresponding pin at the MLP sensor vehicle harness connector. If both resistances are less than 5 ohms, go to next step. If resistances are not as specified, repair open circuit. Remove breakout box, reconnect components and rerun QUICK TEST.

3) Check MLP Harness For Short To Power Or Ground

Turn key off. Ensure MLP sensor harness is disconnected. Install breakout box leaving ECA disconnected. Set DVOM on 200-k/ohm scale. Measure resistance between test pin No. 30 and test pins No. 37 and 57 at the breakout box. Measure resistance between test pin No. 30 and test pins No. 40, 46 and 60 at the breakout box. Measure resistance between test pin No. 30 at the breakout box and chassis ground. If all resistances are 10 k/ohms or more, go to next step. If resistances are less than 10 k/ohms, repair short circuits. Remove breakout box, reconnect components and rerun QUICK TEST.