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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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'67 casting date with a '68 casting number would not be original to your '66, so it's a replacement engine no doubt, wether rebuilt or junkyard Salvage who knows. Could even be a garage rebuild out of another car. I'm guessing originally it was bound for use in an early '68 model vehicle.

There is another stamping on a little flat rectangle part of the engine block on the drivers side on the front of the engine towards the bottom of the cylinder head and the top right side (if your standing in front of it) of the timing cover.
If your coil is in the original '66 location, you may have to remove it to see the little pad, and probably scrape/brush some gunk off unless you keep it real tidy.

It is stamped when the engine is assembled. You correctly deciphered the casting date on the block, have a go at that one and you will know the date the engine was completed.

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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1,170 Posts
Mine is not as well stamped, but I can tell the first character is a "7".
That would mean '67. Some (read most) were poorly stamped originally and some are down right gone if the block was ever decked on a rebuild. The blue item looks to be a spacer plate. Cool 9 23 65 date stamp I think. The black item is the inspection cover.
 

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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1,170 Posts
Before you go out to find a new starter, you may want to read up on this thread: (or one like it)
 

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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1,170 Posts
I'm just guessing here, but you think that walk out could be a sign of starter kickback? As in the bendix is pushing the gear too far forward into the flexplate (hence the shiming) that the engine is starting before the gear retracts, kicking the starter? Unsure, but I'd be looking at installing a new starter anyways.
 

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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1,170 Posts
though it seems the engine will not be the long term mill in the car.
What are your plans for the long term engine? Finding something more correct, building something for performance or crate engine, modern swap or just an engine that's not so mix-match? Just curious.

A C with an F over it would be on the block somewhere
The casting mark on the block is generally in the lifter valley.
 

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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1,170 Posts
1968 production blocks were NOT cast in June of 1967. Statements to the contrary lack a fundamental misunderstanding of factory procedures

View attachment 854253
So you're saying this block is a late '67 production 289 with a '68 302 casting number for use in a '67 vehicle correct? With that information that seems to make sense to me. I guess either way we were correct in it being a '67 289, not a '68 302.
 

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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1,170 Posts
My sense from post #5 was that this was a Cleveland block.
As @1968KR stated in post #9 I think, due to the casting date, it is the new 302 block casting number, but the crank and rods are 289 (shorter stroke and longer rods) you say there is 1M on your crank, which indicates a 289 crank. Able to see a number on the rods?
 

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1966 Mustang 289/306 3spd coupe, 1966 Mustang 289 C4 coupe, 1965/64.5 Mustang 289 4spd convertible
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So, in therory, if I got together a crank, rods, heads and pistons and such, I could build this into a 302?
Any reason you would want to? In my opinion the 289 revs better with its long rod/short stroke. If you're going to bother with sourcing parts, a stroker kit would gain more.
 
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