Déjà vu. This is the clutch pedal shaft where it go through the support bracket. My previous Mustang back in 1980 suffered from the same problem as Ford used an inexpensive pot-metal bushing with a plastic liner that just wasn't up to the task. Once the bushing fails the shaft starts grinding away as the bracket, even cutting a groove in the shaft.
With the shaft being so crooked, the pedal is also crooked making the linkage bind. Since the brake pedal shares the same shaft it has the same problems.
Here are the clutch and brake pedals after I did a quick brushing with the wire wheel to remove any loose rust, then wiped them down. I then applied Corroseal Rust Converting Primer.
It's water based and goes on with a brush. It kind of looks like watered down Elmer's Glue. In just a few minutes the magic starts to happen.
Any surface rust gets converted to magnetite which protects the metal and keeps it from rusting any further. After they dried I sprayed the two pedals with black trim paint.
Here's a closeup of the new pedal support showing the problematic bushing. I'm not trusting this one bit so I picked up an improved bushing set that uses actual needle bearings.
I first had to remove the stock bushing using my Dremel to grind off the 10 little tabs.
A few good whacks with my hammer and the bushing fell right out. Here's the new bearing next to the old bushing.
And finally, two shots of the finished pedal assembly.