The 351M is the same block as the 400, and it is built on the big block platform (with the 429 and 460 though there are some differences), so it might indeed have a C6.
Check out this link and you can just go under there and look at the pan gaskets:
http://www.4wheelnoffroad.com/ (go to the technical link, and then to transmission identification for Ford)
http://www.rebuilt-automatic-transmissions.com/ford.html
You will likely have to make driveshaft modifications, as well as find the correct adaptors for the t-case and get the right bell housing. On the C4/5, the bell housing is removeable, the C6 is not, it is all one piece. You would need a C5 out of a BII to actually have the correct bell housing and adaptor for the t-case in order to work for you, so your friend's cougar is likely out of the question. If you could find the correct parts from a C5 (bell housing, and rear extension piece and shaft) you could then use any C4 as a core and install those parts, but they are going to be the hard parts to find. They do pop up on the various Ranger/Explorer/BII boards once in a while though.
Driveshaft work isn't the worst thing to consider, as it isn't really all that bad. Shortening a shaft is fairly easy and the places that do that will usually charge under $100 for that. If you have to lenghen one, it might be better to get a similar shaft that is longer from somethng in the salvage yard and have it shortened, or call one of the places like High Angle Drivelines. There are several that advertise in most 4x4 magazines, and on this web site:
http://www.4wdlinks.com/cgi-bin/links2/SuperLinks.cgi?action=Category&CID=10