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Follow the procedure in the manual. It isn't hard it is just messy. Climb under the truck at the driver's side door and look inside the frame rail. You will see the HFCM (horizontal fuel conditioning module?) and the drain plug. It requires a 6 mm hex wrench. You will get fuel on you when you do this, it is a **** POOR design. I let about a pint drain out of mine. If you do this in to a clean drain pan, you can poor it in to a clear container as see how much water is in it. If yours is like mine, you will see very small amounts of water. Ford has had issues with these and changed out my sensor.
Joe
Oh, I just noticed you have an '04 and I am not sure if has changed in the year. Check the manual, just don't delay...
I drained it yesterday and still does it, I have done it before when the light came on. My friends 03 F-350 the light stays on constantly and he doesn't worry about it.
Yeah, I had that problem too. I drained my about 15 times in 2 weeks, some times is would go away, some times it would stay on. When you drained it was there more then .2 pints, if not let Ford changed the thing out to fix it if you had more, then try another drain cycle.
I have seen what water does to pistons, valves, and con rods in diesels and worry constantly because if the light is on I bet Ford won't honor the warrenty!