So, let's get back to his original question. He didn't ask us WHAT to buy, he asked us WHAT TO LOOK FOR when considering a used 5.0.
As far as years, well, if you want the 302 from a Mustang (the donor car concept), then 87-93 are the sweet spot years. 93 had hypereutectic pistons, the previous years had forged, so if you ever think you want to add a supercharger, avoid the 93 engines. 87 and 88 were speed density systems (unless it's an 88 California car, then it had Mass Air), and speed density-controlled systems don't respond well to bolt-on performance parts, so you'd likely upgrade to a Mass-Air controlled system at some point. In 89, all Mustang 302s were Mass-Air, so I guess you'd want 89-92 as the "sweetest" of the sweet spot for a Mustang 5.0.
Al Kirshenbaum wrote a technical book, all about Mustangs. I can't remember the name, but it has all the VIN decoding stuff in it. I'd pick up a copy on Amazon, and take it with you to decode the 302 you're looking at. The VIN is stamped on the back of the block, on a flat portion, just behind the lower intake manifold, facing the sky.
In 93, Ford had the stout Cobra. This car had better heads, cam, and roller rockers, among a few other minor things. These are great motors for your FFR build, but didn't make that much more HP, and are probably harder to find these days.
I think without tearing it down, and assuming it's already been removed from the vehicle, there's not a lot to inspect to determine it's strength or weaknesses. You'd be able to see the obvious gasket leaks around the valve covers, lower intake, etc, but more than likely, you're going to replace all of that anyway. If you could remove a head, you could inspect the cylinder walls to see of they are scored badly, but on "most" 302 with, say, 120k miles or less, they probably only need a good honing and deglaze on the cylinders. If they are badly scored, they would need a .030" overbore, to make a 306, and you'd need new pistons, etc, because the stock pistons will not longer fit properly.
I would want to see the rod/main bearings, the condition of the oil (if it's milky like a milkshake, the coolant has got into the oil, usually meaning blown head gaskets, but again, if you tear it down this far to inspect, you might as well rebuild it.
I have rebuilt a few bone stock 302s, each one only requiring the block to be hot tanked, deglazed, and the cylinders honed. The machine shop also cut the main journals on the crankshaft .010" due to scoring. The also installed new cam bearings and freeze plugs. I think all of this cost around $250. I then rebuilt with new oil pump, water pump, all new bearings, gaskets, etc, etc, etc, and also put in an E303 cam ($160) and BBK headers ($200). The entire rebuild, including machine shop work, cam, headers, and all parts, including the rattle can paint to dress it up, was $1000. Very cheap, and you've got a solid engine for your roadster.
I think, visually, you'd want to inspect the block and heads for cracks. Probably hard to do if the engine hasn't been powerwashed. Also, if you can pull the heads off, you could do a quick, basic check for head warpage with a straight edge ruler or somesuch.
Truth is, there's not a whole lot to go wrong with these 302s. They were pretty bulletproof, and if you are confident the engine was running when it was pulled from the donor vehicle, you'll likely be able to rebuild pretty cheaply.
Oh, and if you do rebuild, put some sort of aftermarket cam in it while you are at it, even if you don't add any other bolt-ons at this time. That way, you can upgrade heads, intake, etc, later, without having to really tear into the rotating assembly.
Where are you located? I'm sure you could get another member to go look at the engine with you. Heck, I need a project! If you can get it to me, I'll do the rebuild, free of charge. You buy the parts, I'll put it together for you!
Here's before and after shots of my $1000 build I told you about above:
Greg