Typically there are two parts to the ignition lock system. The mechanical lock (the part that uses the key) and the electrical portion.
If the key turns to all the positions, I highly doubt it is a mechanical problem with the lock/key.
The engine shutting down sounds like the electrical portion of the ignition system is hosed up. (a technical term meaning sumpin ain’t right)
Again typically when you turn the key to position 2 (full on) the trucks fuel computer, and ignition system get power. When you turn the key to position 3 (start) sometimes there is a second feed to both the ignition and fuel computer. This is a hold over to the old days of points, and the system bypassed the dropping resistor to supply full power for a spark.
I thought it might be a vehicle with a computer chip in the key, but looking on line, it appears that the same lock cylinder fits '84-91 Rangers, so I don’t think it is a chipped key. (IIRC either chipped keys were not introduced yet, or if they were they were on high end vehicles only) However the symptom is very similar to what happens on some cars when a chipped key has not been programed into the system. Car cranks, fires, and dies. You should be able to rule this out with a quick phone call to a Ford dealer’s parts department or to Ford Consumer Affairs and ask them if a new ignition key has to be programmed to the truck.
Assuming that the truck does not have a chipped key:
It sounds like the electrical portion of the switch is supplying power to the ignition/computer during crank, but not during run.
does the truck have a tachometer? If so when you let off on the key, does the needle drop slowly as the engine dies, or does it drop like a rock, instantly?
When the key is in position 2 are all the warning lights on?