over heated engine and heater blows cold air

[95mustanggt]

I agree. Make sure there is no air in the system. That would cause the heat to disappear.

I'd also do a compression test. You could have blown a head gasket which would cause the low coolant level and the heater to stop.

Is there coolant on the ground?

Have you had your codes checked? It's easy to do on the 95 5.0L but on the 3.8 you'll probably have to take it in or buy the code reader.