Jeff you will need to cut the inner fenders free from the '67 Mustang body. I like to build up all the engine bay panels and glue them to the chassis then paint it as a complete assembly. I even glue in the shock tower (export) braces before painting.
The '67 Mustang/Shelby isn't totally correct for a '60 Falcon but would be an improvement over what the kit gives you.
Here are the Mustang parts.
The Trumpeter Ford Falcon would be more accurate, photo from the internet: