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You do realize that the handle must be in the horizontal plane for the pawl to line up with the teeth in the shaft? You rotate the handle toward verticle release the brake.

Assuming that the pawl is in place, and the handle is in the horizontal, then the spring that engages the pawl is broken, missing, out out of alignment.
 

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Bill,

In '69 they changed to a foot operated parking brake.

Your handle needs to be pushed forward if the spring on the release is broken.
I thought he had a 67 XR7? But you are right, and I need to learn more about the "new" Cougars.
 
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