My 2000 Villager had the same problems, turned out the distributor was bad - not sure if it was the cam shaft sensor, the power transistor or the bearings giving out in the distributor. Replaced it and all was good. Check with a timing light while cold and when the engine starts to fail. I also found some broken metal pieces in the distributor.
also check for clogged catalytic converter. remove the front o2 sensor. drive van with sensor removed. if problem goes away, your catalytic converter is probably the problem. go to local auto parts store and ask them to scan the OBD. they will do it for free. dealer charges about $80. some sensors will turn on service engine light and some will not. the knock sensor will not turn on service engine light, but if it is malfunctioning the OBD scan will retrieve a code. I had the exact same problem with my 1993 Villager and I went to 6 diferrent garages paid for diagnostic scans, paid hour after hour of shop time. No one could figure it out. Including Ford and spent a fortune trying to cure the problem. Changed the O2 sensor, wires and and plugs, etc. etc. It was very frustrating. A backyard mechanic finally found the problem (brilliant man)and it cost me no new parts just a cup of coffee for my friend. MASS AIR FLOW SENSOR was dirty. It is a small part located under the hood up near the windshield. It is square. When you unscrew the small screw holding it on you lift the top part off. There is a small wire (looks like a guitar string) in there. Mine didn't need to be replaced it was dirty. Looked like a dust build up. My buddy cleared it off by a quick blow with an air compressor. DO NOT TOUCH the wire, I don't know if touching it will harm it. But remember to be gentle after all it is a sensor. GOOD LUCK WITH THAT!
The DRL system does not need to be "activated", it is automatic and turns the lights on at reduced power whenever the engine is running with the park brake off. If the lights you are looking at are down low in the bumper at each corner, these are fog lights. There is a switch just below the headlight switch. Some Mercury models required you to pull out on the headlight switch. Check the owners' manual for proper operation.
As far as I can determine, only the Canadian models have a DRL system. There isn't much info on it in US repair manuals. I own a 1994 Canadian Villager. On my vehicle, the module is screwed onto the passenger side strut tower, right behind the cruise control servo. Not sure if the 1998 models are the same, but should be pretty similar.
It's in the low pressure line running along the passenger side of the engine compartment. If there is a connection there with a nut, it's inside the tube there. If the line has no connection, it is crimped in and that section has to be cut out and replaced with a repair kit, or a new line installed.
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