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Time for a new power steering pump...

I will again. I've had it off twice and didn't see anything wrong with it then though. It appears to be weaping from behind the large nut that tightens up against the rear of the pump housing.
 
I can't imagine it being caused by high rpms that you might run on the street. You can't possibly be running that car at wot to & from work. Maybe if it was on the track and running wot it might cause excessive pressure.

FYI, when Dean & I were figuring out all the details to my engine, I decided to go with a smaller crank pulley to slow the alt and water pump down. It's worked so far, but it does suffer a little at idle because of that.

A new pump should fix the problem.
 
It appears to be weaping from behind the large nut that tightens up against the rear of the pump housing.

As I remember there should be a teflon sealing type washer behind that union adapter....
 
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So, it's from behind this nut shown in this picture. I assume the main point of this nut is to draw and hold tight the reservoir housing to the front pump seal - correct?

And you're saying there should be a seal behind that nut Dave?
 
And you're saying there should be a seal behind that nut Dave?

There has to be a seal there.

The outer shell of the PS pump assembly forms the reservoir. The pump itself is pictured in your top picture. The pressure port on the pump passes through the pump body (reservoir).

Without a seal at this location there woul be metal to metal contact between the reservoir housing and the pumps pressure port.

This could 100% be the source of your leak, but installing a new/rebuilt pump would correct this.
 
A new pump will fix the problem. The main problem you will have with a new pump, though, is finding a "correct one". I have yet to find one. The original pumps on the Mustangs has the return line bent at a 90 degree angle, downward. None of the replacement pumps I've found do ... they're almost straight and can cause problems clearing headers, and oil pressure sending units.

You can bend the replacement ones a little, but there's not enough length on it to get a tube bender on it, so it's extremely hard to bend it without kinking it.

You also have to make sure you get the '70/later pump. It is not the same as the '69/earlier pump.

You can increase the size of the pulley to slow it down. I have underdrive pullies on my crank and water pump, and a larger than stock chrome pully on my PS pump. This gives less assist, and makes the steering a lot better, IMHO. The steering in my '69 has always felt better than it did in my daughter's old '69, or in her current '67. The main difference is just the size of the pulley that I'm using.

I am using the replacement pump, and bent the return line as much as I could. It works with full length headers, but it's tight. I mostly mention this so you're aware that you won't have the room that you do now.

BTW, telfon tape will probably not seal it. Like Dave said, it's probably leaking between the pump and the case. The only way to fix it is to replace that seal on the inside of the case, and the easiest way to do that is with a replacement pump.
 
if you want the stock look you could use a 70 Boss 302 pulley that I understand is a larger one, it is reproduced. someone correct me if wrong
 
I think I just used a plain flat washer on it, what ever will fit. I think what was happening was the nut didn’t have enough surface area to seal the housing to the sealing surface inside the pump and the washer solved it.
 
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