I have a Dr Diff rear disk brake kit with the Mustang calipers on my 68 Barracuda and they work fine. I have the Mopar 73 and up disk sets on the front and am using the 15/16 master cylinder as recommended by Dr Diff.
The 68 Barracuda was a 4 wheel drum car and I maintained the OE distribution block, although the block and all the brake lines, hard and flex are new.
With that said, you mention that neither the e brake or the hydraulic brake will stop the rear disks. That indicates that the rear calipers / brake pads are not extending to grab the disk.
Can you have someone step on the brake pedal let it release and then apply the e brake while you closely watch the rear brake pads and report what you see. Do the pads not move at all or do they just not move enough. You should also contact Dr Diff directly, he is very good on service support. He does post here on FABO occasionally. I believe there is a manual adjustment that can be made on the Mustang calipers to move the pads out. The Dr would know.
