Soooo... After getting the rearend back and installed I took her out for a test drive. The rearend is really quiet now but, I still have the clunking sound. I drove her for about 4 miles to experiment and try to diagnose the problem. Here is what I found:
1. Definitely not the rearend. I am glad however I got the bearings and seals replaced. The also reset the pinion angle since it was a little off. Also found out the it is not an 8 inch rear with 3.89's (per shop manual) but a 9 inch with 3.55's
2. Clunking/Clicking sounds like it is coming from the bellhousing firewall area. You can hear it speed up and slow down with the speed of the car.
3. The noise only occurs when in 1st or reverse. As soon as I shift into 2nd or 3rd the noise stops. I also tried pulling out in 2nd and the noise was not present.
4. She drives fine, and there are no vibrations. There are no issues with shifting either.
I am going to put the rear up on jack stands and fire her up and put her is 1st gear to try and identify where the noise is exactly coming from. I researched this as much as I could and found there may be two possible reasons for the noise.
1. Broken or bad motor or transmission mounts. I replaced the motor mounts 4 years ago. The transmission mount/bushing is original as I cannot find a replacement that is even close to the original.
2. The primary first/reverse gear is missing teeth.
Any advice or insight into this would be greatly appreciated. I have to laugh at this issue, because I always tell my friends and family sooner or later I will have a brand new 1961 Ford with everything that has been/will be replaced or rebuilt. LOL