How do I know if the neutral safety switch is bad, and where is it located?

Actually it is located below the clutch pedal. There are two screws that hold it in place. It is also used to adjust the height of the pedal. The clutch pedal ignition switch is located above the clutch pedal.
if It does not have a "neutral safety" swith. It uses a TR(Trasmission Range) sensor that tells the PCM what gear you have selected, so it can properly shift the 4EAT transmission, and also operates the back up lights. The TR sensor is located on top of the transmission, and is fairly easy to access.

So on an automatic transmission it is a sensor on top of the transmisssion itself? how is it accessed?

I think you can get to it on the right. side ill check and see. if you can while iam doing this. you should go look at the motor on the left or right. and see if you can spot it. looking back on the transmission top from the motor looking back. and see 3 wires. on a little plug. thats it . if you can see it. ill check to make sure i think thats the way a ford is.

the neutral safety switch which is on the arm of the shift rod going into the transmission, and should be on the top a little to the side of the transmission.

How can i tell if its the neutral safety switch or the ignition switch.

When you turn the switch on can you here it click in the fuse box. that will tell you its good. or have some one in a quiet place take the fuse box. off and listen while you turn the switch on . and if they hear a click. its good. thats the way i do it. or just change the switch out and see. you can always return it. to the store if thats not it.