An inch is a very long way out of adjustment. A 1/16" of an inch would be all that's tolerable. Here's what can happen:
a. the striker plate is out of adjustment...thats the pin on the body side. It can slip around if the screws aren't tight or someone has removed the spacer from behind the striker plate. The spacer is deliberately produced with a rough surface so it grips the body and the striker when the screws are tight. Make sure its tight and hasn't slipped out. Here's what to do:
Slowly close door examining how the door fits at the bottom edge and at the top edge. If the door sits squarely in the opening, loosen the screws and position the striker where it needs to be, tighten and try the door latch. Repeat adjustment until the door closes properly. If the door is not a good fit in the body opening, the hinges need adjustment first.
b. the hinges are out of adjustment. In this case, the door will not fit well in the door opening. First check the hinges for wear. Open the door, lift up on the rear edge and see if there's any vertical give to the hinges. There should be no perceptable give in the hinges. As soon as you lift on the door, the body of the car should resist the movement. When you release the lift on the door it shouldn't drop. If there is slop, the hinges need replacement or rebuilding. New hinges and repair kits are available at Mustang shops. Any body shop can assist with installation of hinges. Note: body shops charge by the hour so its cheaper to replace hinges rather than repair them.
c. bad news your car is heavily corroded. When the frame rails of the car are heavily corroded, the car can "banana" in the center and make it impossible to get good door alignment. It takes a lot of effort and money to replace the rocker panels and frame rails to correct this problem. Much cheaper to find another car and use yours as a donor for the good parts it has.
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