The first thing I would get would be either a 4:10 to 4:56 gear. A gear set should be about $500 installed. Then I would get exhaust. Most likely a Bassani x-pipe and some sort of cat-back system. The x-pipe I think is around $450 and the cat-back will probably be about $350-450 depending on what kind you get. Of course you will need slicks or drag radials to use all the power. I would also recommend pulleys, a K&N and maybe some sort of chip like a Superchip. This should get you well into the 12's but I don't think it would be enough to get into the 11's. If you go with a power adder the only one that would fit into your budget would be nitrous. Personally, I'm not a big fan of it because if you don't tune the car right...bye-bye motor. However, with a nitrous kit I know you would be well into the 11's. For a 4.6l, I think they run around $500 and up.
Just my $.02
One other thing, has your car had the recall "fix" for the engine?
96 Cobra
4:10 gears
BBK off road h-pipe
Flowmasters
K&N
Underdrive pulleys
front and rear polyurethane bushings
FMS springs
Steeda CAS/CAM plates