Sorry, but i have to disagree. I've removed/installed many m5od's, fm145/146's, and a4ld's in gen1/2 Rangers, B2's, and gen1 Exploders without having to remove the y-pipe. (though it does take SOME patience) And no, they did not all have bodylifts.
The only truck i've ever had to remove the y-pipe from was a '94 B3000 2wd with an m5od because the bellhousing bolt pattern would not allow me to "rotate" the transmission to clear the y-pipe.
I agree with dennis461's statement that the tranny may be hanging up because of being supported on the input shaft.