1st/2nd Shift rail fork has come off or is broken, it isn't a clutch issue.
Best to pull the transmission.
The M5OD-R1 is a very common trans but it does have an integrated bellhousing so if you go with a used trans then it needs to be from a Lima engine, 2.3l or 2.5l
This thread has pictures of the shift forks and the gears when looking down at the trans from the top: M5OD Shifter Fork Wear Diagnostics (Pics inside) - Ford Truck Enthusiasts Forums
There are 3 shift rails, each with a shift fork, 1/2, 3/4, and 5/reverse(different)
When you shift into 1st you push the gear shift forward the 1st/2nd shift fork pushes the 1st gear syncro(gold) this gets 1st gear to start spinning so dog gears can engage output shaft.
Your 1st/2nd shift fork has either had its keeper pin sheared off or the fork itself is broken.
This is why the shifter moves so far now, it isn't being stopped by the fork pushing against a gear.
It might not be an expensive fix, but trans needs to come out to get a good look at what the problem might be.
You could pull back the carpet and remove shifter and floor plate, and then decide if you want to cut a larger hole to remove the top of the trans and see if it can be fixed that way, might be doable.
Pulling out the trans will make it for sure doable, so up to you really.