86 mustang GT manual Grinds When in Reverse

Based on your quick description, it looks like the most likely candidates for the problem are the clutch disc and/or the throwout bearing. When you depress the clutch pedal on your car, the linkage activates the throwout bearing which, in turn, deactivates the link between the transmission and the engine. With the linkage freed up, you can shift your car into reverse and then, while you applying the gas, you can back up.

If the clutch disc is worn, the linkage between your transmission and engine is anything but solid. In fact, if the disc is worn too badly, it can set up chattering and vibration along with the grinding noises and it is quite possible that your transmission will slip, even though it is in gear. This may also add to the din considerably.

Now, if the throwout bear is worn, it may very well keep your clutch disc from fully disengaging so that when you go to shift, the transmission screams in protest by grinding. Whichever way you look at it, you are likely looking at work that will cost about $1,500 and will involve replacing the clutch disc and throwout bearing.

One other item to note is the transmission linkage itself. If the stops on your gearshift linkage aren’t set correctly, it is likely that when you go to shift, there will be considerable gear grinding.